Political momentum for carbon pricing “unparalleled”, say leading governments and businesses

20 April 2016

LONDON: Carbon pricing is an “inevitable opportunity” that the Paris Agreement is further accelerating, according to government and business leaders from around the world.

The Carbon Pricing Leadership Coalition (CPLC), a global initiative of which The Climate Group is a member, has just held its first High-Level Assembly to introduce new partners and share further evidence for the economic and social benefits of putting a price on carbon.

To date, more than 20 national and state governments, along with more than 90 businesses and organizations, are pushing for the global adoption of carbon pricing as part of the CPLC.

“Leading companies recognize that the only pathway forward to ensure a safe, healthy and prosperous future for all, is a rapid transition to a clean economy,” says Amy Davidsen, US Executive Director, The Climate Group.

“One way to accelerate action is to price carbon emissions – and we are seeing an increased use of this key tool as a way to more efficiently assess financial decisions and market opportunities.”

POLITICAL MOMENTUM

Today, about 40 national and 23 sub-national governments have already put in place carbon pricing mechanisms, covering 12% of global emissions. Companies around the world are also increasingly setting an internal price on carbon in their business plans, in order to future-proof their investments.

The growing momentum around this policy tool is also demonstrated by the fact that half of the Intended Nationally Determined Contributions, or national climate plans, submitted to the global COP21 climate talks in Paris last December included carbon pricing, with leading policymakers calling for its quick implementation.

“Carbon pricing is a critical instrument to unlock the private capital needed for the transition from the fossil fuel to the (bio)renewable age,” said Feike Sijbesma, CEO of Royal DSM and co-chair of the CPLC High-Level Assembly along with Ségolène Royal, Minister of Ecology, Sustainable Development and Energy of France.

“By putting a meaningful price on carbon,” continues Feike Sijbesma, “the current generation can take financial responsibility for its carbon footprint and stop treating the planet like an undepletable bank account and transfer the bill to the next generation.”

LOW CARBON PROSPERITY

A recent report by the International Carbon Action Partnership showed how half of the world agrees that carbon markets are crucial to tackling climate change. Such markets currently cover 9% of global greenhouse gas emissions, a number that will increase to 16% next year – four times more than 2010 – covering almost half of the world’s GDP.

Many of The Climate Group’s members were among the first to implement this innovative policy tool. Just days before the historic Paris Agreement at COP21, the Canadian provinces of Ontario, Quebec and Manitoba – all members of The Climate Group’s States & Regions Alliance – announced they would link their carbon markets.

The move further strengthened the links of the Canadian provinces with the US State of California, another States & Regions Alliance member, to create the largest regional carbon market in North America. Recently, Canada’s First Ministers agreed to promote clean growth and increase their level of ambition in tackling climate change.

By introducing carbon pricing as central to their climate policies, states and regions can encourage businesses to account for the true cost of their emissions, while stimulating their economies. As Kristin Skogen LundDirector-General,Confederation of Norwegian Enterprise explained In an exclusive Climate TV interview, a price on carbon is important “because business logic is basically market based, and if carbon doesn’t cost it is going be difficult to develop low carbon solutions.

“If you have a price on carbon then that strong force in the market dynamics will move toward a faster low carbon society, it is that simple. If you have a price on carbon and you can manage that at the global level you also have this level field of competition, which is also needed for business to succeed.”

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