Under the auspices of Ségolène Royal, President of COP21 and Co-Chair of the CPLC High-Level Assembly, more than 200 government, business and civil society leaders gathered in Paris on June 10 for a High Level Forum on Carbon Pricing. Moving away from previous discussions on whether a carbon price is needed, this action forcing event focused on how to get there in practice. Once again, the CPLC’s tri-fold approach of “broadening, deepening and converging” carbon pricing schemes around the world served as the leading frame for the Forum. After Minister Royal’s introductory remarks, two sessions examined practical next steps required in translating the concept of carbon pricing into concrete action on the ground, and once introduced, how best to recycle carbon pricing revenues.
There are some key messages that the CPLC community can take away from the Forum:
Thinking about strategic revenue recycling - Carbon pricing does not only need to be broadened in terms of coverage, but also in terms of economic aspects to be considered. Next to setting the right incentive for low-carbon investments, carbon pricing schemes represent a potential new source of revenues. Managing these additional revenues carefully has become a central part of the broader discussion on carbon pricing. France presented a new research paper by our CPLC member I4CE on the current experiences with carbon revenue recycling. In this context, the Moroccan Minister El Haité and Egyptian Minister Fahmy both argued for using such new revenues as urgently needed climate finance for mitigation and adaptation on the international level. El Haité illustrated this idea by comparing the 100 billion US dollars of climate finance per year to the more significant sums that could potentially be raised through carbon pricing.
Towards a meaningful carbon price - In the discussions, governmental representatives, business leaders and academics joined forces that only a meaningful carbon price will deliver significant emissions reductions. Minister Royal emphasized that such a price must be high enough, stable, predictable and coordinated to provide investors with clear guidance. She also referred to the draft report by the French “Mestrallet-Canfin-Grandjean Commission” that is arguing for introducing a soft price collar in the EU ETS. Minister Fahmy from Egypt added that in the light of “common, but differentiated responsibility” a carbon price in developing countries should also be fair and equitable. The CPLC keeps on working on this issue analyzing in particular the careful alignment of carbon pricing with other policies to get prices right.
Addressing competitiveness concerns by creating a level playing field - The main concerns of business leaders with regard to carbon pricing remain a lack of predictability and the perceived risks of weakened competiveness. Competitiveness can be addressed either by direct compensation or through the creation of a level playing field. To follow up on the question of competitiveness, the CPLC will soon issue a policy briefing drawing lessons from existing and emerging carbon pricing schemes. Additionally, the Coalition has already joined forces with the World Bank’s Networked Carbon Markets initiative to foster sub-national and international linking of carbon pricing schemes.
Follow-up at the Elysée Palace
In the afternoon, the French Government invited high-level government officials and business executives to the 4th edition of its Business Dialogue. This Business Dialogue started off with opening remarks by President Hollande and focused on carbon pricing as well as climate information disclosure. While discussing the urgent need to turn commitment into action, the participants often referred to the CPLC’s Inaugural High-Level Assembly (HLA) on April 15th in Washington D.C as an important milestone on the path to achieve the transformational vision of the High-Level Panel on Carbon Pricing. This vision is to reach 25% GHG emissions coverage by 2020 and aims at another doubling of coverage within a decade.
In Paris, it became clear again that the CPLC, as a global leadership platform, is in the pole position to drive action on carbon pricing. Together with the World Bank’s partner initiatives Networked Carbon Markets and Partnership for Market Readiness, the Coalition provides a unique global platform for the public and the private sector to exchange ideas and take real action. Paris has shown that the moment has come to move forward and shift the focus from rhetorical support to concrete action on the ground.
Within this scope, the CPLC’s has started to work even more closely with its stakeholders on specific deliverables such as targeted policy briefs, how-to-guides for businesses and face-to-face dialogues applying the “broadening – deepening – converging” approach. Next to this, developing powerful lines of argument and demonstrating empirical evidence to engage and convince the still significant number of carbon pricing skeptics out there will remain one of the Coalition’s key priorities.