Global carbon price urgently needed, says New Climate Economy
Carbon pricing can significantly reduce emissions without harming the global economy, a new report from the influential New Climate Economy (NCE) think-tank has asserted.
The NCE's latest paper, released today (8 October), analyses existing carbon pricing schemes which cover around 12% of global emissions, and considers the impact of a global rollout.
It found that the nine states in the United States’ Regional Greenhouse Gas Initiative (RGGI) performed better than other US states economically, growing 0.4% more from 2009-2013, while reducing their emissions significantly.
Likewise, the report claims Ireland’s carbon tax, introduced in 2010, raised much-needed revenues and avoided even harsher fiscal tightening measures during the global financial crisis. British Columbia’s carbon tax helped reduce emissions by 10% in five years with better economic growth than the rest of Canada.
“The time is right to introduce carbon prices around the world, as well as to pursue complementary measures like reform for fossil fuel subsidies, which act like negative carbon prices,” said Lord Nicholas Stern, co-chair of the NCE’s parent organisation, the Global Commission on the Economy and Climate.
“The world economy is undergoing a remarkable period of transition, and we need to act now to avoid locking ourselves into unstainable development patterns.”
The paper found that concerns over industrial competitiveness – the current excuse for keeping prices too low – have not materialized in practice, and will be even less relevant with a level playing field across countries.
The NCE said the first step in the process could come from the G20 countries at their summit in November, where they should commit to a carbon price by 2020.
Lead author of the paper James Rydge said: “We now have the experience and momentum to coordinate the introduction of carbon pricing across G20 countries, and beyond. This will help to reduce competitiveness concerns and avoid second-best policy options such as border carbon adjustments”.
Around 40 national jurisdictions and 20 cities, states and regions have adopted or are planning carbon prices. These cover 12% of global emissions, triple the coverage of a decade ago.
Over 1,000 major companies and investors have endorsed carbon pricing, and 437 use an internal carbon price, up from 150 in 2014. Earlier this week, global food giant Mars told edie that the company was “deep into talks” about an internal carbon price, partly in preparation for the inevitable rollout of such a policy.
The world’s largest polluting nation is also on board with the idea, operating seven regional trading schemes, with a plan for a national cap-and-trade system from 2017.
“China’s announcement on its upcoming national cap-and-trade system shows real leadership and is the latest sign that momentum is growing fast for carbon pricing as governments realise they can reduce emissions and have growth too,” said Helen Mountford, program director of the NCE.
“The rest of the world should follow China’s example and initiate carbon pricing or strengthen existing schemes in the next few years.”
Oil and gas
The idea has also been picking up support from fossil fuel companies ahead of the Paris climate talks in December. Norweigan company Statoil told edie that a carbon price was the single most desirable outcome from the, while Shell’s CEO said earlier this week that a carbon price would force consumers and producers to account for the costs of tackling climate change.
However Greenpeace have dismissed the calls, saying that carbon pricing is “a costly distraction from meaningful action on emissions”.
Campaigner Charlie Kronick said: “While it appears progressive, the devil is in the detail. The oil industry’s support for climate action appears conditional on those actions having zero impact on its core business or its plans for unchecked expansion.
“By calling for carbon pricing, Shell’s actually suggesting we wait around for 190 countries to agree on a coordinated approach before taking action, which would take more time than we have left to tackle climate change.
“Effective carbon pricing effectively buys the industry more time to continue business as usual.”