Negotiators in Paris last December achieved a previously unattainable consensus among all countries — large and small, industrialized and developing — on a target for minimizing climate change.
They agreed to hold planetary warming to below 2 degrees Celsius, which can only happen by drastically cutting the greenhouse gas emissions that cause climate change.
Adhering to the target requires a de facto energy revolution that transforms economies and societies by weaning the world from dependence on fossil fuels. The magnitude of the task means strategies and spending on a scale far exceeding previous efforts.
Carbon pricing is increasingly being used by governments and companies around the world as a key strategy to drive climate action while maintaining competitiveness, creating jobs and encouraging innovation. The importance of carbon pricing was amplified in the run up to the global climate change agreement in Paris last December.
As countries move towards the implementation of the Agreement, it is the focus of a World Bank conference in Zurich this week which brings together over 30 developed and developing countries to discuss opportunities and challenges related to the role of carbon pricing in meeting their mitigation ambitions.
It has been nearly three months since 195 nations reached a historic agreement at COP21 in Paris to combat climate change and set the world on a path to a low carbon and more resilient future.
And in a little over a month, heads of state and governments will gather in New York to sign the Paris Agreement. Countries will then have one year to ratify the agreement, which will enter into force after it is ratified by at least 55 countries, representing at least 55 percent of global greenhouse gas emissions.
As we approach the signing of the agreement, it's time for countries and companies to seize the momentum from Paris and move from celebration of a landmark deal to action.
So what needs to happen?
Last Saturday, UN climate negotiators from 195 countries agreed on a historic climate change accord in Paris after two weeks of intense negotiations. While many of us were hoping for a hook that would support the use of markets, we were happily surprised to see the extent and detail on carbon markets that was ultimately included in the Paris Agreement.
The Paris climate talks offer a once-in-a-generation opportunity to send the clear signal: We can build prosperity and support economic growth without carbon polluting the earth, and we must act with urgency because of a volatile, warming planet.
I believe political leaders from around the world will rise to this challenge in Paris. For us at the World Bank Group, we will help our client countries and companies make that transition to low-carbon and resilient economic development.
“Nothing compares to the simple pleasure of a bike ride.” - John F. Kennedy
From cradle to grave …
Currently, two billion bicycles are in use around the world. Children, students, professionals, laborers, civil servants and seniors are pedaling around their communities. They all experience the freedom and the natural opportunity for exercise that the bicycle easily provides.
That number could rise to as many as five billion bicycles by 2050, especially with the development of the electric bike that we are seeing worldwide. Over 50 percent of the human population knows how to ride a bike, and the annual production of bicycles is now over 100 million per year. In comparison, car production is currently at about 60 million units per year.
The bicycle is unique and deserves to be given a focus by the global community that it surprisingly has not yet received.
This is especially true of politicians who often underestimate the power of voters who take their freedom to pedal very seriously. City planners also need to be aware of how the bicycle contributes to decreased congestion and improved urban livability worldwide. There are, however, some wonderful exceptions such as the Mayor of London, Boris Johnson, Rome mayor, Ignazio Marino, Taipei mayor, Ko Wen-je, the 108th Mayor of New York City, Michael Bloomberg, Paris mayor, Anne Hildalgo, Rio de Janeiro mayor, Eduardo Paes, and former Washington DC mayor, Adrian Fenty who recognize the importance of incorporating bikes into city planning.
Many countries and cities already share best practices on how to become more cycling friendly. A process that the European Cyclists’ Federation and World Cycling Alliance is heavily engaged in, which recently lead to the EU ministers of Transport agreeing in a groundbreaking “declaration on cycling as a climate friendly transport mode” at a meeting in Luxembourg in early October 2015.
The former mayor of Munich, Christian Ude once said, "Do we want people in leading positions that are too scared to cross a city center on a bicycle? Of course not. Let cyclists get at it!” Cyclists – as citizens - tend to be a very organized and active group with bulk voting power that could be unleashed at any time to advocate for global policy change.
With such an endowment, African nations have much to gain from building internationally pioneering low-carbon energy systems. At the same time, the world stands to gain from Africa avoiding the high-carbon pathway that has been followed by today’s richest countries and major economies in other regions.
The poor pay more
Despite this energy wealth, two-thirds of Africans (621 million people) still live in households that do not have electricity. Africa’s poorest people also pay the world’s highest prices for energy. A woman living in a village in northern Nigeria, for example, pays 60 to 80 times as much for a unit of energy as a resident of New York because she does not have access to grid electricity.
In just six weeks, world leaders will meet in Paris to negotiate a new global climate-change agreement. To date, 150 countries have submitted plans detailing how they will move their economies along a more resilient low-carbon trajectory. These plans represent the first generation of investments to be made in order to build a competitive future without the dangerous levels of carbon-dioxide emissions that are now driving global warming.
The transition to a cleaner future will require both government action and the right incentives for the private sector. At the center should be a strong public policy that puts a price on carbon pollution. Placing a higher price on carbon-based fuels, electricity, and industrial activities will create incentives for the use of cleaner fuels, save energy, and promote a shift to greener investments. Measures such as carbon taxes and fees, emissions-trading programs and other pricing mechanisms, and removal of inefficient subsidies can give businesses and households the certainty and predictability they need to make long-term investments in climate-smart development.
Those of us who have been working on climate change over the years have witnessed a number of encouraging announcements as a run-up to the Paris COP, where the global community is gathering to agree on collective action to reduce greenhouse gas emissions beyond 2020. The two largest emitters have announced action, with China agreeing for the first time to peak its GHG emissions by 2030 (using a number of tools such as emissions trading), and the United States agreeing to cut its emissions to 26-28% below 2005 levels by 2025. The World Bank’s State and Trends Report on Carbon Pricing announced that about 40 countries and 23 cities, states, or regions have put a price on carbon emissions—explicitly internalizing costs of damage to the environment. This means that about 7 billion tons of carbon dioxide, or 12 percent of global greenhouse gas emissions are covered by some type of carbon pricing scheme. And countries continue to submit pledges to reduce GHG emissions—through the Intended Nationally Determined Contributions—in advance of the Paris COP.
In the energy world, there is equal excitement about recent developments. Renewable energy prices have significantly fallen over the years, in particular for wind and solar. The International Energy Agency (IEA) announced earlier this month that renewable energy will be the largest source of new power generation capacity globally—700 GW in the next 5 years. The IEA does not expect that the fall of oil prices to affect the growth in renewable energy, and expects the power sector to continue to lead the way in the global energy transformation. The IEA also estimates that the share of power generation from modern renewables (including hydropower) will increase from 22 % in 2013 to 26% in 2020.
During his visit to Washington last week, China’s President Xi Jinping confirmed that the world’s largest greenhouse gas emitter, which has pledged to reduce its carbon intensity and reach a peak of overall emissions by 2030, will use a cap-and-trade market approach to help realize this.
China already has 7 pilot markets in cities and provinces in place that cover 1 billion tons of greenhouse gas emissions annually. Under the national scheme, now to go live in 2017, this could increase to 4 billion tons according to Chinese researchers - making it the world’s largest national emissions trading system.
It’s an exciting step and demonstration of China’s commitment to achieve its low carbon goals.