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carbon markets

Testing carbon pricing in Brazil: 20 companies join an innovative simulation

Nicolette Bartlett's picture
Bidding platform for ETS simulation. BVRio


By Nicolette Bartlett, Prince of Wales’s Corporate Leaders Group and CISL

Developing effective carbon pricing mechanisms can and will play a key part in tackling climate change, facilitating the much needed investment cost-effectively and at scale. Specifically, “cap and trade” policies or emissions trading schemes (ETS) have been widely adopted in recent years because of their potential to foster greenhouse gas emissions reductions.

Over the past few years, carbon pricing has risen on the corporate agenda – from the Prince of Wales’s Corporate Leaders Group’s (CLG) Carbon Price Communiqué to the UN Climate Leadership Summit in September, where 73 countries and over 1,000 companies came together to publically lend their support for carbon pricing. Here at COP20 in Lima, many businesses and civil society organisations are asking what role carbon pricing will have in the Paris 2015 Climate Agreement.

One Brazilian business group that CLG has been partnering with is taking a novel approach. Empresas Pelo Clima (EPC) implemented an ETS Simulation using live corporate data to engage Brazilian companies in discussions around what a robust cap and trade market might entail and how it could be designed and implemented. The ETS Simulation is delivered in partnership between the Rio de Janeiro Green Stock Exchange (BVRio – Bolsa Verde do Rio de Janeiro) and EPC through the Center for Sustainability Studies of the Business Management School at the Getulio Vargas Foundation (FGV-EASP).

Carbon pricing helps investors assess investment prospects for the future

Frank Pegan's picture
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Frank Pegan is the CEO of Catholic Super, an Australian superannuation fund currently managing AU$5.21 billion. He spoke ahead of the UN Climate Leadership Summit about the value of carbon pricing for investors.

Electricity CEO: Carbon pricing is necessary to ensure long-term investments support a low-carbon future

Henri Proglio's picture
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Henri Proglio is the chairman and CEO of Électricité de France (EDF). He spoke ahead of the UN Secretary-General's Climate Leadership Summit about the importance of carbon pricing for the electricity sector to move toward a low-carbon economy.

Carbon Partnership Facility: Innovation in Scaling-up Emission Reductions

Richard Zechter's picture
LED lights are part fo an energy efficient street lighting program in Thailand. Carbon Partnership Facility

We’re about 16 months away from the 2015 UN climate meeting in Paris, intended to reach an ambitious global agreement on climate change. Now, more than ever, there is a need for innovation to scale up climate action.

The Bank’s Carbon Partnership Facility (CPF) is helping blaze that trail.

The role of the CPF is to innovate in scaling up carbon crediting programs that promote sustainable, low-carbon economic growth in developing countries. In its first set of programs, the CPF moved past the project-by-project approach to larger scale through the Clean Development Mechanism’s Programme of Activities, catalyzing investment in methane capture from landfills, small-scale renewable energy, and energy efficiency.

Racing to a Competitive Economy: China Pursues High GDP, Low-Carbon Growth

Xueman Wang's picture
Also available in: 中文

 Yang Aijun/World Bank

December 2009 does not seem so long ago. The UN climate conference in Copenhagen had just come to a disappointing end, and I headed home feeling depressed.  I returned to China for holiday and was surprised to see the widespread awareness of climate change and the collective sense of urgency for action. The concept of "low carbon" was discussed in all major and local newspapers. To my amazement, I even found an advertisement for a "low carbon" wedding. I finished my holiday and went back to Washington with optimism and hope: Despite the failings of Copenhagen, China, the biggest emitter in the world and the largest developing country, was going through a real transformational change. China clearly saw action on climate change as serving its own interest and as an opportunity to pursue a green growth model that decouples economic development from carbon emissions and resource dependence.

In the past five years, the world has witnessed the emergence of China as a leader for tackling climate change.  A few weeks ago, colleagues at the World Bank Group heard an evidenced-based presentation by Vice Chairman Xie Zhenhua from the National Development Reform Commission (NDRC) of China, who showed what China had done in the past, is doing now, and plans to do in the future. He shared his candid assessment of the challenges, mistakes, and lessons learned from China's experience.

China’s progress is impressive. Between 2005 and 2013, average economic growth has been above 8 percent while the country’s emissions intensity has decreased by 28.5 percent compared with 2005 levels. This equates to emissions reductions of 23 million tons of CO2. These reductions were achieved through massive closures of inefficient coal fire plants, aggressive energy efficiency programs, expanding the renewable energy program, and large investments in clean technology.

While these numbers are impressive, sustaining them will be harder. Over the last 10 years, China has targeted its "low-hanging fruit" for mitigation options. The challenge today is how China will sustain annual GDP growth of more than 7 percent while continuing to reduce its economy’s emissions intensity.

Putting A Price on Carbon: Nations Opt For Market-Based Solutions

Xueman Wang's picture

 Curt Carnemark/World Bank

Climate change is a threat to global development and to poverty alleviation. And yet, reducing greenhouse gas emissions is proving difficult because all players in an economy contribute to the problem. To make a difference, we must reduce our emissions in a coordinated manner.

This is no easy task. So where do we go from here?

One approach involves pricing the “externalities” that are contributing to climate change. Pricing externalities into the costs of production is nothing new. A classic textbook example is the paper mill that sits upstream from a fishing village.

Discharge from the mill pollutes the river, diminishing the fishermen’s catch. The mill freely uses the water of the river in its production of paper, but does not pay for the damage of the negative externality that it causes. To remedy the situation, regulations can be put in place to stop waste from going into the river – or the mill can pay a fine equivalent to the loss of the fishermen’s revenue.

The latter is an example of an externality priced into the cost of production. The same can be done to combat climate change.

In this case, carbon emissions are the externality that must be priced. Doing so provides a cost-effective and efficient means to drive down greenhouse gas emissions as the cost of such pollution goes up.

A Possible Rebirth of the Carbon Market?

Chandra Shekhar Sinha's picture

 Priya.Balraju1/Flickr
Photo courtesy: Priya.Balraju1/Flickr

Many people have voiced pessimism over an international agreement to address climate change since the 2009 climate conference in Copenhagen fell short of expectations. The lack of a comprehensive, global effort to curb emissions; the failure by the United States to pass meaningful federal legislation, the continued recession in Europe; and, most recently, the election results in Australia have undermined efforts to put a price on carbon and dampened hope for market-based solutions to climate change.

The somber mood was evident at the Carbon Forum Asia, held in Bangkok between September 24 – 27.  But participants at the event also found a glimmer of hope.

Domestic Carbon Markets Draw Attention at the Carbon Expo

Neeraj Prasad's picture

Mary Barton-Dock, director of the Climate Policy and Finance unit of the World Bank, welcomes the participants to the 10th Carbon Expo in Barcelona
Some 2000 visitors from more than 100 countries are leaving Barcelona today at the end of Carbon Expo. The meeting, now in its 10th year, got off to a great start on Wednesday with the director of the World Bank´s Climate Policy and Finance unit, Mary Barton-Dock, welcoming the participants, followed by stimulating opening remarks from Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC).

Figueres urged the audience to continue building carbon markets and not wait for policy perfections. She also encouraged participants to continue making the case for carbon markets to policy makers, who have committed to a global agreement on emissions by 2015. She emphasized the importance for the private sector to more loudly voice their willingness and ability to move to a low-carbon growth trajectory and compared the carbon market to a tree planted just a few years ago, not possibly imagining that today it would have sprouted 6,800 projects registered with the UNFCCC in 88 countries, representing 215 billion dollars of investment.

However, Figueres also acknowledged the importance of domestic initiatives that were putting a price on carbon, at a time when a global agreement continued to challenge policy makers.

China Gets Ready for a New Carbon Era

Wang Shu's picture

 Rush hour traffic on a road in Beijing, China. - Photo: Shutterstock

Also available in Chinese

The 5th Assembly of the World Bank’s Partnership for Market Readiness (PMR) is coming to an end after rich and rewarding meetings in Washington DC this week. I had the opportunity to present China’s final Market Readiness Proposal (MRP) (pdf), or in more simple language, China’s proposal to build a national emission trading system (ETS). Together with China, the PMR also received proposals from Chile, Costa Rica and Mexico on their initiatives. (Also read: Can Carbon Taxes Be Effective?)

From the Chinese perspective, our MRP serves as a summary of the Government’s initial thoughts on how a domestic ETS would be established to cover the whole country. For this to happen, a lot of work needs to be done, and this proposal provides a framework and roadmap to guide us on our journey. We are expecting domestic and international institutions, experts and stakeholders from different levels to be involved in this design process. Above all, we hope to draw on the experience of existing carbon markets around the world as well as from the seven pilot ETSs - comprising five cities and two provinces - set to start this year in China. Facilitating continuous technical dialogues, PMR serves as a knowledge exchange platform for our team from China and all the participant countries. This is a unique and valuable experience. 

Shaping the Next Generation of Carbon Markets

Rachel Kyte's picture

 Smoke coming out of two smokestacks at a factory in Estonia. - Photo: World Bank/Flickr

Right now, the carbon markets of the future are under construction in all corners of the world.

China is determined to pursue low-carbon development and is embracing the market as the most efficient way to do so. Wang Shu, the deputy director of China's National Development and Reform Commission, told us this week that he sees the "magic of the market" as the most efficient way to drive China's green growth.

Five Chinese cities and two provinces are piloting emissions trading systems with the goal of building a national carbon market. Chile is exploring an emissions trading system and focusing on energy efficiency and renewable energy. Mexico is developing market-based mechanisms in energy efficiency that could cut its emissions by as much as 30 percent by 2020. Costa Rica is aiming for a carbon-neutral economy by 2021.

Each of the countries pioneering market-based mechanisms to reduce their domestic carbon emissions are leaders. Bring them together in one room, and you begin to see progress and the enormous potential for a powerful networking domestic system that could begin to produce a predictable carbon price -- a sina que non for the speed and scale of climate action we need.

That's happening this week at the World Bank.

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