Carbon Pricing Spreads as a Tool to Tackle Climate Change

UN Climate Change News, 14 December 2018 – Countries are increasingly using or considering to use carbon pricing instruments as a means to achieve their commitments under the Paris Agreement, and examples were presented this week at the UN Climate Change Conference (COP24) in Katowice, Poland.

As of April 2018, carbon pricing initiatives implemented or scheduled for implementation were expected to cover 20 percent of the world’s total greenhouse gas emissions. Parallel to this, climate policy supporters at the global level have become more involved backing strategies that take into consideration carbon pricing.

At a COP24 event on international support for the design and implementation of carbon pricing instruments, George Heyman, Minister of Environment and Climate Change Strategy, British Columbia, Canada, whose province has had a carbon tax since 2008, spoke about the successful Green Growth Incentive programme in his province.

He emphasized the need to protect economic competitiveness when implementing carbon pricing and the need for effective collaboration, by providing incentives for people to invest, for example in home energy and zero-emission vehicles.

British Columbia was recognized this week with a Global Climate Action Award for committing all government operations to carbon neutrality.

Building on some seven municipal and provincial cap-and-trade markets, China announced in 2017 what should become the world’s largest carbon market. Its planners have credited their experience with the Clean Development Mechanism, a tool under the Kyoto Protocol, for speeding up the country’s move to emissions trading.

Maoshang Duan, Professor and Director, China Carbon Market Center, Tsinghua University, described China’s emissions trading system (ETS) and the strong political will behind its creation. He said the success of China’s ETS is due to sufficient technical capacity, international support, and willingness of relevant stakeholders.

Despite the spread of carbon pricing, Constanze Haug, Head of the International Carbon Action Partnership (ICAP) secretariat, cautioned that there is a lack of capacity and resources to support implementation of carbon pricing on a much wider scale.

The event on Thursday on the margins of COP24 brought together international institutions and implementing countries to share their experiences in designing and implementing carbon pricing instruments. It was meant to reflect on how needs have changed since countries agreed in Paris in 2015 to limit average global temperature rise to 2 degrees Celsius and strive for the safer 1-5-degree target, and how international support can be scaled up and targeted towards evolving domestic efforts.

Daniel Besley, Senior Climate Change Specialist, World Bank, Partnership for Market Readiness (PMR), briefed the event on the PMR forum, which aims for collective innovation and action on carbon pricing to scale up climate change mitigation.

PMR supports capacity-building, and supports countries to assess markets and design carbon pricing mechanisms. Mr. Besley stressed the need to “develop a clear communication strategy early in the policy design” and said that “readiness-building does not only aim at preparing for the implementation of a carbon pricing instrument, but it must also support the decision making about the instrument itself.”

Since the annual climate conference two years ago, COP22 in Marrakech, Morocco, the UN Climate Change secretariat has been providing technical support to jurisdictions considering to adopt carbon pricing instruments. In that time, four national and three regional jurisdictions have received technical support through the secretariat’s regional collaboration centres. The work complements that of the World Bank’s PMR and that of ICAP. Together, these organizations channel knowledge, capacity-building and support to countries worldwide in the development and implementation of carbon pricing instruments.

In the panel discussion that followed the keynote remarks, the participants heard about the experiences of Ukraine, Dominican Republic and Pakistan, which revealed that while progress has been achieved, more resources and the development of measurement, reporting and verification systems are crucial and urgent if carbon pricing is to help raise ambition in countries’ nationally determined contributions under the Paris Agreement.