Heads of State and CEOs Declare Support for Carbon Pricing to Transform Global Economy

PARIS, November 30, 2015 –  Six heads of state and government and the leaders of the World Bank Group and the International Monetary Fund today called on companies and countries to follow up on their ambitions for Paris by putting a price on carbon to drive investment for a cleaner, greener future.

In a remarkable show of unity on the first day of the climate talks in Paris, heads of state and government from a number of countries called on the world to start pricing carbon pollution as a key to combatting climate change and transforming the global economy. The heads of state and government included the leaders of France, Chile, Ethiopia, Germany, Mexico and Canada.  

 “The goal is to gradually set a sufficiently high carbon price around the world to encourage better behaviour,” said H.E. President François Hollande of France. “In France, the Energy Transition Act has already made provision for a substantial increase in the price of carbon, to €22 per metric tonne next year and a projected €100 by 2030. In Europe, we will also improve our carbon market while ensuring that the most compliant countries remain competitive. Very quickly, a company consuming less CO2 should gain a decisive competitive advantage.”

The call by heads of state and government was echoed by ministers and CEOs from around the world at another event today in Paris to officially launch the Carbon Pricing Leadership Coalition (CPLC). The Coalition brings together key governments such as Mexico, Germany, France, Chile and California, along with nearly 90 global businesses and NGOs. 

Partners in the Coalition have adopted an agreed course of action that advances carbon pricing by collecting and sharing the best evidence of successful carbon pricing policy, mobilizing business support for more ambitious action, and convening leadership dialogues around the world with the goal of tackling the political challenges that prevent greater use of carbon pricing. 

“We are seeing increasing momentum from heads of state and other global leaders to put a price on carbon pollution, but more action is needed to cut harmful polluting emissions,” said World Bank Group President Jim Yong Kim. “These statements of support from leaders today are critically important, as is the work of Carbon Pricing Leadership Coalition. We must ensure that this momentum for carbon pricing translates into impact on the ground.”

"A successful outcome to the Paris climate talks will send a powerful message that nations can work together for the good of the planet,” said IMF Managing Director Christine Lagarde. The right carbon price should be at the center of this effort. Indeed, given the slump in energy prices, there has never been a better time to transition to smart, credible and effective carbon pricing. Policy makers need to price it right, tax it smart, and do it now."
 

Ahead of the Paris talks more than 90 developed and developing countries, including the European Union, have indicated plans to use international, regional, or domestic carbon pricing schemes for mitigation action.  

Pricing carbon can deliver multiple benefits including reducing health and environmental impacts, like premature deaths from exposure to outdoor air pollution. It provides governments with the financing needed to support sustainable development as well as spurring greater investments in low carbon growth. Through carbon pricing, countries can provide an incentive for businesses and investors to reduce their exposure to carbon, while accelerating investments in clean energy, clean transport and clean technologies.

About 40 nations and 23 cities, states and regions have implemented or are putting a price on carbon with programs and mechanisms covering about 12 percent of global greenhouse gas emissions. The coverage is expected to grow given China’s recent announcement to bring in a national emissions trading system in 2017.

A recent World Bank report, State and Trends of Carbon Pricing 2015, shows the number of implemented or planned carbon pricing schemes around the world has almost doubled since 2012 and are now worth about $50 billion.

Carbon Pricing: It’s on the move

• Heads of state and World Bank Group President Jim Yong Kim will meet in Paris today to call on countries and companies around the world to put a price on carbon pollution.

• About 40 governments and 23 cities, states and regions already have carbon pricing mechanisms covering about 12 percent of annual global greenhouse gas emissions.

• Germany, Norway, Sweden, Switzerland, and the World Bank Group will announce a new $500 million Transformative Carbon Asset Facility: to help developing countries combat climate change by transitioning to carbon pricing mechanisms.

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World leaders will be in Paris today for the official opening of COP 21 - the United Nations Conference on Climate Change—to lay out their plans to tackle climate change and cut greenhouse gas emissions.

Later in the day, a group of leaders and World Bank Group President Jim Yong Kim will call on countries and companies around the world to put a price on carbon pollution as a means of cutting emissions and driving investment in cleaner, greener growth.

The leaders see carbon pricing as providing a triple dividend: It’s good for the environment and people; it raises revenue efficiently, making it possible to reduce more distortionary taxes; and it drives private sector innovation and critically needed investments in clean and low-emission technologies.

To bolster the case for action, the World Bank Group and partners are also formally launching the Carbon Pricing Leadership Coalition at the Paris climate talks. The grouping of government, business and civil society leaders was created last year after the U.N. Climate Summit. The coalition seeks to expand the use of effective carbon pricing policies that can maintain competitiveness, create jobs, encourage innovation, and achieve meaningful emissions reductions.

Today, some 40 governments and 23 cities, states and regions are putting a price on carbon and cover about 12% of annual global greenhouse gas emissions. This coverage represents a three-fold increase over the past decade, and growth continues.

Earlier this year, South Korea launched an ambitious carbon market including 500 facilities in more than 20 sectors. China — the world’s biggest polluter — recently announced plans for a national emissions trading program starting in 2017.

Meanwhile, more than 400 companies around the world report using a voluntary, internal price on carbon in their business plans.

Further evidence of momentum for carbon pricing comes from national plans, known as the Intended Nationally Determined Contributions (INDC), submitted by countries for the Paris talks. More than 90 INDCs include proposals for emissions trading, carbon taxes, and other pricing mechanisms as part of a wide range of action plans by governments to address their particular challenges.

Map of Global Carbon Markets

The Paris meeting today will also see the launch of a new $500 million initiative, the Transformative Carbon Asset Facility, to help spur greater efforts to price and measure carbon pollution.

Germany, Norway, Sweden, Switzerland, and the World Bank Group jointly launched the initiative, saying it would pilot new ways to catalyze large cuts in greenhouse gas emissions. TCAF will also help developing countries combat climate change by transitioning to carbon-pricing mechanisms.

TCAF will enable the generation, accounting, and payments for emission reductions at a greater scale, than has been used so far.  It is expected that the new facility’s support will be provided alongside $2 billion of investment and policy-related lending by the World Bank Group and other sources

BG Group joins Carbon Pricing Leadership Coalition

Courtesy of BG Group:

BG Group today announces it has joined the World Bank Carbon Pricing Leadership Coalition (CPLC), an initiative which brings together over 85 governments, corporate and civil society organisations to collaborate on carbon pricing systems and policies.

The Group’s entry to the CPLC coincides with the company’s decision to also make public the internal carbon screening values it uses when reviewing investment decisions.

BG Group has been valuing carbon internally for a number of years, to plan for the cost of carbon emissions under existing carbon pricing regimes, and the impact of future carbon pricing systems, on its projects.

Valuing carbon on projects has enabled the Group to identify design options which improve energy efficiency and reduce emissions.

These carbon screening values are now available on the BG Group web site – www.bg-group.com/658/sustainability/valuing-our-environment-and-climate/climate-change/carbon-pricing/.

Helge Lund, BG Group Chief Executive, commented:    

"Carbon pricing will be a critical component in the world’s battle to tackle climate change. Putting a price on carbon will reflect its cost to society. It creates transparency among carbon producers, and will encourage the development of more efficient carbon reduction technologies. BG Group has today joined the CPLC and made public the carbon screening values we use when evaluating new investment, to assist in developing, and expanding the evidence base for, effective carbon pricing systems."

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Use of Carbon Pricing Revenues

Substantial revenues are being raised as a growing number of countries and regions are using carbon pricing mechanisms.

The ways revenues are used vary significantly between jurisdictions, and the range of potential future uses is even more wide-ranging. Revenues from carbon pricing appear likely to continue to increase around the world, and continuing debate will be needed about how these funds should best be used in future.

The full note from the Carbon Markets & Investment Association (CMIA) summarizes the revenues now being raised and briefly looks at some current and possible future uses. 

Note available for download here.