Top 10 Carbon Pricing Stories from Paris
On December 12, international negotiators representing 195 countries adopted The Paris Agreement to combat climate change. Among the key provisions of the Agreement was a new mechanism to ensure that carbon emissions reductions are “real, measurable and long-term” - a provision that gives investors and the private sector a strong signal to begin to shift their portfolios toward lower-carbon assets. The Agreement also paves the way toward enacting successful carbon pricing and carbon market regimes.
While most leading climate scientists, economists, and policy experts have long been in agreement on the need for some form of carbon price, the Paris climate summit saw a dramatic uptick in discussions of carbon pricing, at the highest levels of business and government. At dozens of side events and media briefings, government leaders, from Presidents and Prime Ministers to finance and environment chiefs, called for a carbon price as a necessary tool in decarbonizing entire economies, and establishing international standards for carbon reductions.
At the same time, business leaders from around the globe - including oil and gas executives - pushed a carbon price as the most efficient mechanism for the private sector to squeeze carbon out of their operations and supply chains.
Leading the charge were the members of the Carbon Pricing Leadership Coalition, a self-selecting group of leading governments, companies and civil society organizations convened by the World Bank Group who are embracing carbon pricing as an efficient and effective means of slashing emissions across enterprises and entire economies.
The support and momentum for carbon pricing was picked up throughout the Paris negotiations. Following is one take on the “Top Ten” carbon pricing stories out of Paris:
World Leaders Call For Price On CO2 Emissions (International Business Times): Six heads of state leaders and major global economic actors are urging diplomats gathering in Paris to adopt a price on carbon dioxide emissions. “We’ve come together in the shadow of an undeniable truth: We simply cannot afford to continue polluting the planet at the current pace,” Jim Yong Kim, President of World Bank Group.
A Growing Push to Price Carbon (New York Times): Should there be a global price on carbon? Many countries say yes. About 40 countries and 23 regions, states and cities, representing about 12 percent of global greenhouse gas emissions, have mechanisms to put a price on carbon.
The best is the enemy of the green (The Economist): Carbon prices tackle the problem of emissions head on. When people engage in a carbon-intensive activity, such as driving a car, they impose a cost on others, often without even realising it: the emissions produced when petrol is burned contribute to global warming. Because that cost is not built into the price of petrol, people buy more of it than they otherwise would, atmospheric carbon goes up, and the world bakes. A carbon price that added the missing cost to the price of petrol (and coal and every other carbon-generating activity) would give people an incentive to emit less.
Corporate Managers Back Carbon-Pricing Mechanisms, Survey Says (Wall Street Journal): Putting a price on carbon emissions is the fastest way to push companies to become more environmentally friendly, corporate executives say. More than eight in ten chief executives want international leaders to provide a clear roadmap and timeline on future carbon pricing mechanisms at United Nations climate negotiations in Paris next month, according to a survey of 75 chief executives by the UN Global Compact and Accenture Strategy.
Obama Calls Carbon Price Better Than Regulations (Scientific American): “I have long believed that the most elegant way to drive innovation and to reduce carbon emissions is to put a price on it,” President Obama said yesterday in a press conference in Paris. He echoed economists who describe greenhouse gas emissions as “externalities”—things of value that aren’t correctly priced by the market. The economic impact of carbon emissions on sea-level rise, for example, isn’t counted in the price of gasoline.
What is carbon pricing and why is it so important in battling climate change? (Los Angeles Times): Advocates argue that the adoption of carbon pricing will provide an incentive for companies to reduce their greenhouse gas emissions and encourage the production of carbon-free technologies. Longer term, it would make a coal-fired power plant less competitive relative to wind turbines or carbon-free sources of electricity. Also, if the cost of petroleum rises, vehicles that rely on electrical power will become more competitive and desirable. The domino effect is potentially huge.
Signal and Noise at the Paris Climate Summit (New Yorker): … Perhaps the only marketplace signals that would be strong enough to catalyze that level of investment would be eliminating oil and gas subsidies and implementing penalties on CO2 pollution. “We won’t see a significant shift away from fossil fuels in the energy industry until an honest price is imposed on carbon-dioxide emissions,” Marie-José Nadeau, the chair of the World Energy Council, said.
Prime Minister Hailemariam Emphasizes the Importance of Carbon Pricing (Geeska Afrika Online): At a high-level panel organized on the sidelines of the Climate Summit in Paris, Ethiopian Prime Minister Hailemariam emphasized that he was promoting carbon pricing because of its interest in seeing climate change properly addressed since it is suffering from climate change and its impacts.
How finance ministers could fall in love with carbon pricing (Potsdam Institute): “Finance ministers are facing strong demand for public investments in education, security or transport – pricing CO2 turns out to be a suitable means of raising the revenues that are needed,” says Max Franks from the Potsdam Institute for Climate Impact Research.
Elon Musk calls for carbon price to halve the transition time to clean energy (Guardian): Elon Musk, one of the world’s greatest innovators, says the key to tackling climate change and driving clean energy innovation is a carbon price very similar to the one Australia abolished