A new report by the High-Level Commission on Carbon Pricing and Competitiveness calls on industry peers and governments to adopt strong carbon pricing policies.
The Commission consists of CEOs and senior executives from leading global companies, former high-level government officials and academic representatives, who are calling for policies to unlock economic opportunities and manage competitiveness concerns, especially as more businesses develop low-carbon strategies.
Anand Mahindra, chairman of Mahindra Group commented: “Bold and immediate commitment is needed to respond to the challenge of climate change. Carbon pricing is an effective response especiallyà‚ when coupled with other policies. It can result in remarkable opportunities for corporations, countries, and communities.”
Key report findings:
- Policies such as lowering other corporate taxes and providing technology innovation assistance to emerging industries, can support carbon pricing and alleviate competitiveness concerns
- Other variablesà¢€”such as corporate tax rates, energy prices, wage rates, etc à¢€” can equally impact industry decisions to invest
- Evidence shows that putting a price on carbon pollution does not curtail industrial growth or prompt polluters to move to countries that do not charge such a price
- Carbon pricing can be advantageous for low-emitting firms and has the potential to boost new industries and advance innovation in existing ones. For example, after British Columbia introduced a carbon tax, a new clean technology sector emerged, comprising over 200 companies collectively generating $1.7b annually
- Carbon pricing is a flexible and low-cost approach to reduce greenhouse gases
- Carbon pricing, along with other policies, such as increased investment in low-carbon technologies, can drive innovation, foster continuous process improvement and facilitate the transition to a low-carbon economy
“Carbon pricing has proven to be one of the most effective tools to unlock the potential from the private sector to support innovation and low-carbon growth. Carbon pricing is only one of many elements determining global competitiveness and plays a smaller role than other factors, for instance, labor and infrastructure,” said Feike Sijbesma, CEO, DSM.
Both Sweden ( $127/tCO2e ) and California have successfully managed the impact of carbon prices on international competitiveness for high-emitting and trade-exposed sectors. Sweden ultimately managed to boost GDP and decrease emissions, while California used border adjustment measures to address specific competitiveness concerns, requiring electricity imported from border states to obtain emissions allowances.
The report has received broad support from business communities, including over 80 international companies with several from WEF CEO Climate Leaders Alliance and influential organizations such as WBCSD, We Mean Business, and ICC.