Secondly, carbon pricing is an essential part of getting prices right for the move to a low carbon more resilient growth. A few early lessons are described in the World Bank Group publication The FASTER Principles for Successful Carbon Pricing – which lays out principles for effective, efficient and fair pricing of carbon. 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. “If we really want to send market signals to enable enterprises to make their decisions under optimal economic conditions, which may be optimal ecological conditions, then the issue of carbon prices inevitably arises as it is the most tangible signal that can be sent to all economic actors”, he said.
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Out of more than 150 “intended nationally determined contributions” (INDCs) to a climate deal, around 80 refer to carbon pricing.
Putting a price on carbon can be done in many ways: using an emissions trading system (ETS), like the one in Europe, or introducing carbon taxes and fees, like in Sweden and Norway.
Instead, Angel Gurria, secretary-general of the OECD, said carbon pricing will form part of domestic policy making that will help countries work towards the broad climate goals agreed at COP 21.
A half dozen heads of state joined forces with leaders of states, cities and firms on Monday to call for wider adoption of carbon pricing policies forward of a United Nations local weather change summit in Paris in December.
The leaders have taken steps to price carbon pollution and catalyse greener investment in their countries and regions.
Private sector support comes from US Institutional Investor CalPERS, ENGIE of France, Mahindra Group of India, and Netherlands-based Royal DSM, who will help link business needs with public policies through the Carbon Pricing Leadership Coalition, an action based platform that will be officially launched in Paris on November 30, 2015.
So far, they said, about 40 nations and 23 cities, states and regions have initiated carbon-pricing schemes. The good news is that many countries have already included carbon pricing in their national climate plans.
Together with the leaders of the Carbon Pricing Panel, we call on governments to seize the moment – for the sake of the planet and future generations – to put a price on carbon pollution that reflects the environmental damage it causes.
We stand ready to support governments that act.
The longer we wait, the costlier and more hard it will be for us – and our children and grandchildren – to protect the planet. “It marks a turning point from the debate on the economic systems needed for low-carbon growth to the implementation of policies and pricing mechanisms to deliver jobs, clean growth and prosperity”, said World Bank Group President Jim Yong Kim.
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Kim is president of the World Bank Group and Lagarde MD of the worldwide Monetary Fund.
