New carbon pricing systems are being developed in China, Chile and other countries to help reduce greenhouse gas emissions and encourage clean energy and sustainable development. This will mean new reporting requirements and regulations for an increasing number of national and multi-national companies.
To help corporate leaders prepare, we studied the experiences of three companies that are already operating within one or more carbon pricing systems and the steps they took to prepare for a world where greenhouse gas emissions have a price.
Our report released today by the Partnership for Market Readiness describes the impacts of a changing climate on business strategies, analyzes risks and opportunities as new climate policies are implemented, and distills lessons learned by Pacific Gas and Electric Company, Rio Tinto, and Royal Dutch Shell. The three companies represent a variety of energy-intense industries, including oil, gas, metals, mining and energy generation, transmission and distribution. Two operate in more than one jurisdiction with emissions trading.
A smiling Mosammet Sukkur Jahan, walks to her thatched home in Datiar Char (shoal) in northern Bangladesh to prepare lunch for her family. While eating, Jahan and her neighbors Sharifa, Amena, and Halima were at ease as flood water rushed around their homes located in the middle of vast Teesta River during August and September 2014. They live on a shoal, which is an elevated sandbar that keeps their homes dry.
Chars or Shoals form through siltation along riverbeds. The constant interplay of erosion and accretion creates and sustains the shoals. There are mainly three types of chars: dead, mature, and running. Dead chars are usually permanent land formations. Mature chars are the ones that have not faced any major changes for 10-15 years. Running chars face regular changes and continuous emerge and disappear. The emergence and erosion determines the intensity of vulnerability in the ‘chars’. Typically a new char land requires at least 10 years of continuous presence before it becomes habitable for people.
Around the world, countries are developing ways to put a price on carbon to fight climate change. They are choosing different approaches depending on their national circumstances. China has pilot emissions trading systems (ETS) in seven provinces and cities and is planning a national ETS in 2016. Chile recently approved a carbon tax to start in 2018. Mexico and Colombia are implementing sector-wide crediting mechanisms that reward low emission programs with carbon credits, for example in the transport sector by substituting conventional vehicles with electric cars. Many countries have renewable energy portfolio standards and feed-in tariffs.
These domestic initiatives are crucial to lowering greenhouse gas emissions. Each is being designed individually, though, creating a patchwork of regulations and missing the economy of scale that a connected system could bring.
The World Bank Group has been working on ways to network these initiatives and facilitate an integrated international carbon market.
This week in London, the Prince of Wales brought together representatives from government, the private sector, and civil society around the goal of protecting and restoring tropical forests. The gathering took stock of forest commitments made at the UN Secretary-General's Climate Summit last September and identified priority actions for 2015 – a critical year for advancing progress on the inseparable issues of development, poverty, and climate change.
With all eyes on a new climate agreement in Paris later this year, healthy forests and landscapes are seen as critical to cutting greenhouse gas emissions to net zero before 2100. The key underlying question is how to best achieve a true transformation in how we manage our forest landscapes, which are still degrading at a rapid rate.
- Urban Development
- Social Development
- Private Sector Development
- Labor and Social Protection
- Information and Communication Technologies
- Global Economy
- Climate Change
- Agriculture and Rural Development
- The World Region
- South Asia
- Sri Lanka
The global economy is growing, but a bout of New Year anxiety has taken hold, posing challenges to our global mission: boosting the prosperity of the bottom 40%, ending extreme poverty by 2030, and avoiding a climate meltdown.
Scientists declared this past year as the warmest year on Earth since record-keeping began in 1880, and a series of scientific reports found glaciers melting and extreme weather events intensifying. There can be no doubt that this year world leaders must commit to transforming their economies to combat climate change.
As the Financial Times pointed out recently, oil companies such as Exxon Mobil and Shell would, under measures considered for the global climate pact to be sealed in Paris next year, cease to exist in their current forms in 35 years. The proposal of phasing out global carbon dioxide emissions as early as 2050 was not resolved in the UN climate talks in Lima last December.
However, the adoption of even a watered-down version in Paris or in later rounds of climate negotiations would mean that the amount of oil and gas produced by these companies, and the quantity of coal mined by enterprises such as Rio Tinto, would need to be greatly reduced by mid-century. Such long-term concerns might over the next years trump current worries about an oil price slump that could be on the wane as soon as marginal projects and producers are shaken out from the bottom of the market.
Amy Ericson, U.S. country president for technology company Alstom, spoke at the World Bank Group about the interplay between carbon pricing and innovation that can lower carbon emissions for cleaner, more sustainable development. Alstom is involved in the Carbon Pricing Leadership Coalition.