Germany, Ethiopia, Mexico leaders back carbon pricing

Six heads of state are endorsing a World Bank campaign to make polluters pay, while Paris climate text ignores the subject

Germany (Windwärts Energie GmbH / Photographer: Mark Mühlhaus/attenzione)

For Germany, carbon pricing is a way to promote investment in renewables (Windwärts Energie GmbH / Photographer: Mark Mühlhaus/attenzione)

By Megan Darby

Six heads of state are calling for carbon pricing, in the highest level intervention to date.

Germany, Chile, France, Ethiopia, Philippines and Mexico leaders on Monday voiced support for moves to make climate polluters pay.

That will help governments and businesses deliver on the climate plans they have submitted towards a UN pact, they argued.

“Low carbon technologies are an element in the fight against worldwide climate change,” said German chancellor Angela Merkel.

“With a price for carbon and a global carbon market, we promote investment in these climate friendly technologies.”

Coordinated by the World Bank and IMF, the statement came out as negotiators entered a fiery week of talks, ahead of December’s critical Paris summit.

Report: Developing countries demand additions to slimmed-down climate text

Diplomats in Bonn were due to start line-by-line discussion of a draft text that had been radically slimmed down by two co-chairs.

But developing countries said the editor’s knife had gone too far and demanded to be allowed to reinsert some elements first.

Rachel Kyte, climate envoy at the World Bank, was unconcerned to see all mention of carbon pricing dropped, however.

She told Climate Home: “We don’t, as the World Bank Group, believe that we have to legislate carbon pricing in the negotiated text.”

Instead, the multilateral organisation is concerned with what happens “on the Monday morning after Paris,” when governments start to put their plans into practice.

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Out of more than 150 “intended nationally determined contributions” (INDCs) to a climate deal, around 80 refer to carbon pricing.

“We regard those plans as a first generation investment prospectus for a more competitive, cleaner future,” Kyte said. “We are pleased that so many of the INDCs do mention getting prices right.”

At the last count, 40 countries and 23 regional authorities covering 12% of global greenhouse gas emissions had a carbon tax or trading system.

The biggest of these, in the EU, has faced fierce opposition from energy intensive industries like steel and chemicals. These sectors argue the increased costs put them at an unfair disadvantage to competitors overseas.

Meanwhile green groups warn the market price is too low, at $8 a tonne, to spur significant climate action.

“As new schemes expand, importantly in China, designers must ensure the carbon price is both high and reliable enough to drive low-carbon investment at scale,” said Damien Morris of UK think tank Sandbag.

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France president Francois Hollande acknowledged competitiveness concerns, but said: “We must therefore act with resolve.”

A price on carbon “is the most tangible signal that can be sent to all economic actors,” he added.

Chile is taxing its transport and power sectors and using the revenue to fund education reform, president Michelle Bachelet said. “We believe in the polluter pays principle.”

And Ethiopia, one of the first developing countries to put forward a climate plan, hopes to finance some initiatives through international carbon markets.

“Like many nations, Ethiopia has much to gain from early action on climate change – and much to lose if we collectively fail to act,” said prime minister Hailemariam Desalegn.

“A carbon price can be a win-win, not just for nations like Ethiopia, but for the entire planet, provided that it is coordinated and its incidence does not unduly fall on the poor.”

California governor Jerry Brown and Eduardo Paes, mayor of Rio de Janeiro, also endorsed the statement.

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