At this year's climate ministerial of the World Bank Group/IMF Spring Meetings, 42 finance and development ministers discussed phasing out fossil fuel subsidies, putting a price on carbon and mobilizing the trillions of dollars in finance needed for a smooth, orderly transition to a low-carbon economy. World Bank Group Vice President and Special Envoy for Climate Change Rachel Kyte describes the conversations in the room and the key takeaways.
Feike Sijbesma is CEO of Royal DSM, a health, nutrition, and materials company that has evolved from its original purpose (it was established by the Dutch government in 1902 to mine coal) into a science-based company that develops sustainable materials. It takes its name from the original Nederlandse Staatsmijnen, or Dutch State Mines.
“I think, first of all, we need to agree that climate change is real.
By Jeff Swartz, Director of International Policy at the International Emissions Trading Association (IETA)
With carbon pricing policies emerging around the world and the recent show of public support for carbon pricing from 74 national governments and more than 1,000 businesses, one piece of the puzzle that needs to be solved is how to connect systems to create an international carbon pricing framework.
In the lead up to the Paris negotiations this December, governments from around the world – including China, South Africa and Russia – have signaled their willingness to apply a price on carbon, yet businesses and civil society know that we will not be able to move towards a fully functional low-carbon global economy by operating under a fragmented system of international carbon pricing policies. Furthermore, the IPCC’s verdict on the need to increase international cooperation on climate mitigation policies highlights the need for an international carbon pricing framework.
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.
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.
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.
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.