Industry and political leaders united in call for stronger carbon pricing

On the eve of the anniversary of the COP21 global climate change agreement, leaders from the worlds of business and politics again called for strong carbon pricing as a means of delivering on the target of limiting global warming to 2 degrees Celsius.

Speaking at the New York Times Energy For Tomorrow event in Paris on Thursday, the French Minister of Ecology, Sustainable Development and Energy, Segolene Royal, told attendees that while developments have been positive so far, Intended Nationally Determined Contributions needed to be secured. She also announced the formation of a new body whose aim it is to drive carbon pricing in order to acheive the objective.
Segolene Royal at the New York Times Energy for Tomorrow conference in Paris
“We shouldn’t rest on our laurels. We need to speed up implementation of the agreement and work on national agreements. Goals need to be transferred into detailed provisions.”

Royal also announced Thursday the establishment of a high level economic commission responsible for identifying the “social cost” of carbon.

Just days before the opening in Marrakech (Morocco) of COP22, Royal named economists Joseph Stiglitz and Nicholas Stern to head a committee on the “social cost” of carbon. The results will be used as part of the momentum to develop carbon pricing.

“The objective of the committee, set up within the coalition framework for a vibrant carbon price in association with the World Bank, is to identify a corridor of reference values of the social cost of carbon, in line with the ambition of the Paris Agreement.”

“This will have a strong political impact in advancing carbon pricing in the world,” she added.

The value of the social cost of carbon permits is, she said, aimed at revealing the benefits (environmental, health, etc.) that the planet can take from reducing each tonne of greenhouse gas emissions.

“These values can then be used as reference to channel funding towards low carbon project development and design national carbon pricing instruments. This is the biggest challenge of the century but I am confident we can win this fight.”

Meanwhile another leading figure prominent in the call for a strong approach to carbon pricing was Angel Gurria, Secretary General of the Organisation for Economic Co-operation and Development (OECD).

“The dismantling of fossil fuel subsidies is important, as well as a big prize on carbon. We need a big fat price on carbon ” this is my most scientific and policy based statement! The question is how big and how fat?” Gurria said.

He also expressed confidence in the target being met inside the OECD area, but didn’t have the same faith in how it would develop outside that economic arrangement.
Moderator Keith Bradsher interviews Angel Gurria of the OECD at the New York Times Energy for Tomorrow conference in Paris
“The US is moving towards a lower carbon future, and it will be enforced through regulation and if not moving fast enough it will be driven by social pressure. China and the US are key. Large emerging economies are crucial to delivery.”

The OECD chief also took aim at the insistence in Europe of promoting the Emissions Trading System (ETS) as a solution to the larger issue.

“The ETS gives single digit (carbon) prices and it has now failed four times ” why continue with that? Because politicians don’t like the word tax? – It’s dysfunctional. The ETS is not producing the prices that will change conduct.”

Gurria concluded by reinforcing his point on the need for political and regulatory underpinning if the climate change objective is to be achieved.

“It happens because you make a policy decision. Nothing will happen spontaneously. There needs to be a deliberate policy choice. Make it into law and enforce it.”

“We just created a centre for climate finance in Kyoto a few weeks ago. It’s there because we need to add everything we collectively know and give courage to each other- countries will move if they know the others are moving and they don’t want to be left out.”

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