CPLC Participates in the Climate Business Forum for Latin America and the Caribbean in Bogota, Colombia

During the Climate Business Forum for Latin America and the Caribbean that took place in June, the CPLC convened a leadership lunch with the Vice Minister of Finance of Colombia - Mr. Andrés Escobar and about 30 business leaders from Latin America, including 10 CEOs from large regional groups.

The objective of the dialogue was to provide regional business leaders the opportunity to engage with the Government of Colombia, as a member of the Pacific Alliance, to discuss the growing momentum to use carbon pricing policies to achieve climate and fiscal policy goals. Participants also discussed the opportunities for improved regional collaboration and future carbon pricing pathways for the region. Moving forward, CPLC will continue supporting the engagement of the Colombian government and businesses in the ongoing carbon pricing dialogue taken place in the context of the Pacific Alliance and a potential American regional market.

The Forum, attended by over 200 Latin American business leaders, served as an important convening platform for business leaders from around the region and other emerging markets who are steering their companies towards new business models that capitalize on climate-smart practices and initiatives.

View fullsize

Colombia’s Finance Minister Mauricio Cardenas opens at the Climate Business Forum 2016

CPLC High Level Forum, Paris June 10 – Minister Royal and other leaders request faster and further action on carbon pricing

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.

View fullsize

There are some key messages that the CPLC community can take away from the Forum:

Broadening

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.

View fullsize

Deepening

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.

View fullsize

Converging

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.

View fullsize

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.

View fullsize

Looking Forward

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.

Carbon Pricing Breakfast @ Carbon Expo Highlights Key 2016 Actions to Put a #PriceOnCarbon

On the margins of the annual Carbon Expo, the Carbon Pricing Leadership Coalition (CPLC) held a Partners’ strategy session in Cologne.  The Coalition was launched in Paris at COP21 with the goal of bringing together government and business leaders to accelerate the uptake of successful carbon pricing systems around the world.  The Coalition now includes 26 governments and over 90 businesses, with more than 30 strategic partners providing insight and support to the agenda. 

View fullsize

Some highlights from the strategy session include:

Communications is key

There is a substantial amount of analysis and evidence available supporting the rationale for well-designed carbon pricing solutions.  These messages need to be synthesized and communicated in a targeted way to leaders and decision makers.  The CPLC can play a key role here.  We should use real-life examples that demonstrate where carbon pricing has effectively changed investment decisions in companies and in national economies. 

Highlight key messages with CPLC issue briefs

'Building and Sharing the Evidence Base' Working Group will lead the development of CPLC Issue Briefs, including: 

• Competitiveness and Carbon Pricing – as this is typically the #1 concern raised about carbon pricing, this brief will summarize existing research (e.g. in last year’s State and Trends of Carbon Pricing report) with key messages and findings for businesses and policy makers.  This will be released to inform the Business & Climate Summit on 28-29 June in London.

• The Effectiveness of Carbon Pricing – showcasing carbon pricing success stories, building from the existing FASTER Principles for Successful Carbon Pricing.

• Options for Using Carbon Pricing Revenues – Partner I4CE is preparing a research paper on this topic that will be presented in Paris at a CPLC Dialogue on 10 June and the Climate Markets & Investment Association will also share a paper they have done. This analysis and thinking can be consolidated to help finance ministers and policy makers to understand the options and pros/cons of different uses of carbon pricing revenue.

•  Policy alignment – As countries prepare to implement their national strategies for climate action submitted in Paris, they need help determining how to align carbon pricing with other climate and investment policies.  The World Bank Group plans to focus on this topic—working closely with the OECD’s existing research  in the next State and Trends of Carbon Pricing report to be released in the fall, this will then be synthesized by CPLC.

• The Benefits of Networking Carbon Markets – As more governments begin to explore how to link and network markets post-Paris (particularly under Article 6), this topic is important; also as a means to combat concerns about competitiveness.  The World Bank Group’s Networked Carbon Markets Initiative will help lead the drafting of this brief, which will summarize why this is an important strategy. The paper is targeted for fall release.

Engage youth in the conversation

This topic was discussed also as it is important to engage the next generation on carbon pricing and climate.  The video produced for the 2014 Climate Summit was mentioned as an excellent tool and should be used again. A more detailed strategy will be developed this summer.     

Companies want to share experiences with internal carbon pricing

The 'Mobilizing Business Support' Working Group will organize a series of webinars, working with the World Economic Forum’s CEO Climate Leadership effort will join forces with Yale University and partners World Business Council on Sustainable Development and CDP to organize these CPLC information-exchange sessions for both executives and technical experts. The first webinar is tentatively planned for July.

Investors are supporting carbon pricing and want to engage more with companies 

 The Breakfast benefited from the attendance of Philippe Desfossés, CEO of French Pension Fund ERAFP , who explained his interest in learning more about how companies were using internal carbon pricing to manage their climate risk and scale up their climate friendly investments.  CPLC Partner Ceres  is organizing a brainstorming call on 6 June with all interested Partners to develop a strategy here.

Planned leadership dialogues  

The 'Convening Leadership Dialogues' Working Group is helping to shape a number of CPLC Leadership Dialogues in the coming months, and Partners are invited to contact the Secretariat if they are interested in participating.  These include national Dialogues in South Africa, Colombia, Mexico, India and China; regional dialogues in Latin America and North America, and international events at the New York Climate Week  in September and COP22 in Morocco.

In all, it was a very successful and active exchange of information and ideas; many thanks to the CPLC Partners who joined us in Cologne - and who received their new CPLC Put a #PriceOnCarbon t-shirts!

MIT joins Carbon Pricing Leadership Coalition

MIT has formally joined the Carbon Pricing Leadership Coalition, a global partnership of governments, businesses, and civil society organizations working together with the goal of applying a price on carbon emissions, the predominant cause of climate change.

Jim Yong Kim, president of the World Bank, and Christine Lagarde, managing director of the International Monetary Fund, officially launched the coalition at the Paris climate talks last November. Its membership includes more than 20 national and subnational governments, more than 90 major companies, and dozens of leading nonprofit organizations. MIT is the second university to join the coalition after Yale.

“Remarkable progress in low-carbon energy innovation and commercialization — happening here at MIT and at universities, companies, and government labs around the world — is a reason for great optimism,” Reif wrote in the letter. “Yet we know that without the right incentives in policy, advances in technology alone will not deliver the energy transformation we need to meet the climate challenge.”

In MIT’s Plan for Action on Climate Change, issued in October 2015, MIT’s senior officers described carbon pricing as the kind of “systemic solution” than can help incentivize the switch to low- and zero-carbon sources of energy. Under carbon pricing, emitters of carbon pollution typically must pay a charge on each ton of carbon emissions they produce. This creates a market incentive for encouraging entities throughout the economy — from households to power plants — to shift to cleaner sources of energy.  

Maria Zuber, MIT’s vice president for research, said that over the last couple of years, as the MIT community discussed potential strategies for addressing climate change, carbon pricing emerged as a strong point of consensus.

“If you ask MIT economists and policy experts what we should do about climate change, chances are they will tell you: Put a price on carbon emissions,” said Zuber. “Along with increased funding for clean energy research and development, carbon pricing is one of the most effective things we can do to speed up the transition to a zero-carbon economy.”

Carbon pricing policy, including its optimal design and implementation, is a significant area of focus for many MIT faculty members and researchers, including those affiliated with MIT’s Center for Energy and Environmental Policy Research and Joint Program on the Science and Policy of Global Change. Sharing knowledge on best practices is a priority for the Carbon Pricing Leadership Coalition.

In today’s letter, Reif also noted that MIT is exploring how best to incorporate carbon pricing into the Institute’s internal decision making. As a first step, the Department of Facilities is finalizing a carbon calculator for use in campus capital projects.

Below is the text of the letter sent May 19 by President Reif to John Roome, senior director for climate change, at the World Bank Group.

Dear Mr. Roome,

I am honored to accept your invitation for the Massachusetts Institute of Technology (MIT) to join the Carbon Pricing Leadership Coalition.

The urgent threat of climate change demands nothing less than the complete transformation of the global energy system. To help meet this challenge, a vibrant community of MIT faculty members, researchers, students, and alumni are working to develop new sources of low- and zero-carbon energy and bring these innovations to market.

Remarkable progress in low-carbon energy innovation and commercialization — happening here at MIT and at universities, companies, and government labs around the world — is a reason for great optimism. Yet we know that without the right incentives in policy, advances in technology alone will not deliver the energy transformation we need to meet the climate challenge.

As I have learned from leading MIT economists and policy experts, putting a price on carbon is one of the surest mechanisms available to accelerate the transition to low- and zero-carbon energy sources. Indeed, over the last couple of years, as MIT community members have discussed how the Institute could best advance solutions to the climate challenge, supporting carbon pricing emerged as a clear point of consensus.

We look forward to learning from the experiences of other CPLC members and to sharing what we have learned. Membership in the CPLC is a natural and welcome outgrowth of two areas of MIT’s ongoing work:

• We continue to forge partnerships with leaders from government, industry, and civil society interested in enacting carbon pricing through public policies in jurisdictions around the world.
• And we are beginning to explore the most effective ways to incorporate a price on carbon into our internal decision-making.

We are grateful to join you today, steadfast in our conviction that collaboration and engagement among government, industry, academia, and civil society offer the clearest path to meeting the challenge of climate change.

Sincerely,

L. Rafael Reif

Leaders Aim to Put a Price on Half of All Global Carbon Emissions

• Leaders set goal of expanding carbon pricing to cover 25 percent of global emissions by 2020, and achieving 50 percent coverage within the next decade

• Global cooperation on carbon pricing must be ‘widened, deepened and promoted’

• Carbon emissions must be priced so that pollution becomes an operating cost

Ten leaders, including Chancellor of the Federal Republic of Germany Angela Merkel, Mexican President Enrique Peña Nieto, and World Bank Group President Jim Yong Kim, have laid out goals in a joint vision statement to expand carbon pricing to cover 25 percent of global emissions by 2020, and achieve 50 percent coverage within the next decade.

Currently, some 40 governments and 23 cities, states and regions put a price on carbon pollution, accounting for 12 percent of annual global greenhouse gas emissions. This marks a three-fold increase over the past decade.  

And as Bank Group President Kim noted at a high level assembly on carbon pricing, at the Spring Meetings of the World Bank Group, more action is needed on carbon pricing to help halt global warming and spur more investments into clean technologies.

The latest call for action is being made by members of the Carbon Pricing Panel, including the Prime Minister of Canada, Justin Trudeau, President of Chile Michelle Bachelet, Prime Minister of the Federal Republic of Ethiopia Hailemariam Dessalegn, President of France François Hollande, German Chancellor Angela Merkel, and Mexican President Enrique Peña Nieto, together with Bank Group President Kim, IMF Managing Director Lagarde, California Governor Edmund G. Brown Jr., Rio de Janeiro Mayor Eduardo Paes and OECD Secretary-General Angel Gurría.

A Vision Statement accompanying their announcement charts out three steps that need to be taken to widen, deepen and promote global cooperation on carbon pricing. First, the number of countries and businesses that participate in a carbon pricing system needs to increase. Second, prices need to be significant enough to account for pollution as an operating cost, and incentives for investments in low carbon solutions need to be established. And third, better links between the various regional and national pricing systems already in place need to be set up.

Speaking at the high level CPLC meeting, the IMF’s Lagarde emphasized the value of cutting emissions.  

“If the top 20 emitters in the world were to impose carbon charges that reflect only their domestic and environmental benefits, this would already reduce global emissions by over 10 percent,” she said.

United Nations Secretary-General Ban Ki-Moon, who is expecting a record number of heads of state and government to participate on April 22 in a signing ceremony in New York for the Paris climate agreement said: “We must put a price on pollution and provide incentives to accelerate low carbon pathways. Market prices, market indices, and investment portfolios can no longer continue to ignore the growing cost of unsustainable production and consumption behaviors on the health of our planet.”

Momentum for putting a price on carbon pollution is growing. Some 90 countries included mention of carbon pricing in their national plans, called the Nationally Determined Contributions, known as NDCs, prepared for the Paris climate change conference. In addition, more than 450 companies around the world report using a voluntary, internal price on carbon in their business plans and more plan to follow suit in the next two years. The number of implemented or scheduled carbon pricing schemes has also nearly doubled since 2012, amounting to a collective value of $50b.

The Carbon Pricing Leadership Coalition (CPLC), a global initiative that brings together more than 20 national and state governments, more than 90 businesses, and civil society organizations and international agencies, aims at garnering public-private support for carbon pricing around the world.

New partners joining the coalition include Côte d’Ivoire, Colombia, Finland and the United Kingdom; companies including Iberdrola, Rusal, and Tata Group; and Yale University.

Bank Group President Kim and IMF Managing Director Lagarde also convene the Carbon Pricing Panel, the high level leadership group that aims to spur further, faster action ahead of the Paris climate talks.

To learn more about climate change and carbon pricing, please go to: http://www.carbonpricingleadership.org/