Businesses and top officials in Barcelona for the Carbon Expo support moves to make polluters pay, but don’t expect miracles
By Alex Pashley in Barcelona
Countries are drawing up a patchwork of carbon cutting plans to strike a global climate deal in December.
But putting a price on carbon dioxide, in the form of taxes or cap-and-trade schemes, has to date played a minor role.
It features just twice in the 90-page negotiating text that will be whittled down in Paris.
But top climate officials have thrown their weight behind carbon pricing: an essential tool, they say, to steer the planet towards net zero emissions by the end of the century and rein in global warming.
For the UN’s climate chief, Christiana Figueres, carbon pricing is one part of a triple-pronged strategy on the “construction site” of the climate challenge.
Leadership from the corporate world and countries taking action in their national interest are the other two prongs.
The World Bank’s Rachel Kyte says it’s “no longer a matter of if or when… there is a growing sense of inevitability to put a price on carbon”.
While Teresa Ribera at French think tank IDDRI, an insider in France’s upcoming presidency of UN talks, says carbon prices “address mitigation in the mother tongue of the economy”.
All spoke on Tuesday at Carbon Expo in Barcelona, a three-day gathering of diplomats, civil society and business leaders.
Today around 40 countries and 20 regions mandate a price on carbon dioxide, analysts Ecofys and the World Bank find, in measures worth an estimated $50 billion.
And the value of emissions trading schemes rose by $2 billion to $34 billion in 2015, covering 12% of world greenhouse gas emissions, according to the Carbon Pricing Watch 2015 report.
Prices vary widely, from US$3 a tonne in Mexico up to US$130 in Sweden.
In the world’s largest carbon market, the EU emissions trading scheme, the report projects an average permit price of €18.40 in 2020-2030. That falls short of the €30/t it says is needed to drive low carbon investment.
China is set to overtake the EU with a nationwide scheme from 2016, building on seven regional pilots.
The Carbon Expo is filled with carbon pricing advocates, but the concept does have its detractors.
Socialist-leaning countries like Venezuela in the ALBA negotiating bloc reject market-based mechanisms. You cannot put a price on nature, they argue, nor should businesses or nations be allowed to trade away their obligations.
Business leaders backing proposals at last week’s Climate and Business Summit in Paris point towards a growing acceptance of a carbon price.
Figueres, speaking with RTCC in Barcelona, says this is critical: “Industry is beginning to realise that it is inevitable and that it is in everyone’s interest to get on board as soon as possible.”
But she cautioned other regulations and cooperation between countries are needed for a wide-scale roll out of carbon pricing.
“I think it’s an important tool but it’s not a miracle cure.”
Carbon traders and consultants tell RTCC they see progress but much hinges on the outcome of the Paris summit.
Giving clearer signals to business so they can prepare is critical, adds Kyte, and the “foundation for unlocking investment… for a innovative, dynamic low carbon economy”.