World Bank Unveils Major Global Support for Carbon Pricing

  • by Carey L. Biron (washington)
  • Tuesday, September 23, 2014
  • Inter Press Service

Together, these countries account for more than half of all greenhouse gas emissions, according to the World Bank, which unveiled a major new push towards global carbon pricing. Other backers include South Africa, Indonesia, Mexico and the Philippines.3

The World Bank also announced that more than a thousand corporations and investors have recently signed several high-level statements on the issue, urging policymakers to take substantive steps towards a global price on carbon emissions.

The data comes as more than 100 government leaders are in New York this week for a United Nations-sponsored summit where governments and the private sector are to announce new climate-related commitments. Around that event, a record 310,000-plus demonstrators took to the streets in New York on Sunday, urging action.

"Today we see real momentum," World Bank Group President Jim Yong Kim said Monday. "Governments representing almost half of the world's population and 52 percent of global GDP have thrown their weight behind a price on carbon as a necessary, if insufficient, solution to climate change and a step on the path to low carbon growth."

While there are several ways to impose a financial cost on carbon – including a tax, a trading system and others – proponents say any of these would bring multiple benefits. They would create economic incentives to both reduce emissions and boost the development of renewable energies, while resulting revenues could be used to finance adaptation and mitigation efforts.

Still, carbon prices have also been blamed for raising costs on day-to-day items, including food. Poorly structured carbon taxes could thus impact most immediately on the poor.

The new support builds on a public statement of backing for carbon pricing that the World Bank published in June. At that time, 40 national and more than 20 sub-national carbon taxes or trading schemes had been set up, accounting for a bit more than a fifth of global emissions.

On Monday, Kim also announced a new public- and private-sector grouping, the Carbon Pricing Leadership Coalition, that will begin meeting to "advance carbon pricing solutions" in advance of widely anticipated negotiations next year in Paris. There, the global community is expected to agree on a new framework for responding to climate change.

"Carbon pricing if expanded to this scale and then globally has the potential to bring down emissions in a way that supports clean energy and low-carbon growth while giving businesses the flexibility to innovate and find the most efficient choices," the World Bank noted in a feature story on the new initiatives Monday. "This is a wake-up moment."

Investor energy

Of course, government representatives have been meeting to discuss options around combating climate change for decades, and there is near universal agreement today that actions taken thus far have not been commensurate with the threat.

Further, market-based schemes such as carbon pricing would only offer a partial solution. Yet even so, the World Bank's new list of supporters doesn't include some of the most important players, including the United States and India.

The current phase in the climate discussion is nonetheless distinctive for the new corporate support for some sort of global action around climate change, particularly for a broad price on carbon. Just in the past few days, a series of major calls to action have been made by multinational companies and some of the world's largest institutional investors.

"Support for carbon pricing among the investor community is greater than it's ever been," Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC), told IPS.

"Climate change puts the investments and savings of million of people at risk. Investors support ambitious action on climate change and a strong carbon price to reduce these risks and to unlock capital for low carbon investments."

The London-based IIGCC was involved in developing a major statement from global investors on climate change. The most recent version, released last week, included nearly 350 signatories representing some 24 trillion dollars in assets, and called for carbon pricing, greater support for renewable energy and efficiency, and the phasing out of fossil fuel subsidies.

"Investors are willing and able to invest in low carbon energy," Pfeifer says. "If governments put good policies and carbon pricing in place, investors can help finance the transition to a low carbon economy."

Environment and economy

The newly stepped-up interest around climate change on the part of corporate executives and investors underscores a strengthening understanding of climate issues as posing threats beyond the environmental. Increasingly, corporations are being forced to explain to their shareholders how climate change and related regulation could impact on their underlying finances – and how prepared they are for that eventuality.

Last week, a widely discussed study found that many of the world's largest companies, including the oil giant ExxonMobil and financial services firm Goldman Sachs, are already incorporating internal carbon prices into their financial planning and risk management. "ajor corporations not only recognize climate-related regulatory risks and opportunities, but also are proactively planning for them and are outpacing their governments in thinking ahead," the report found.

Some proponents say this engagement by the private sector could now provide key energy ahead of the Paris climate negotiations next year.

"These are vast and marked changes, and very different from any other time I can remember. The level of interest on the part of the private sector is radically different than it was even five years ago," Mindy Lubber, the president of Ceres, a U.S. coalition of investors and others focused on sustainability, told IPS.

"It goes without saying that financial and corporate leaders calling for action does change the debate. It moves the discussion from one of the environment versus the economy to one about both."

Still, some are concerned that the new focus on the private sector's role in addressing climate change, including at this week's U.N. summit, is inverting the proper role of government and state regulation.

"We're increasingly seeing the private sector telling government how companies can be supported on energy and climate issues," Janet Redman, director of the Climate Policy Program at the Institute for Policy Studies, a Washington think tank, told IPS.

"That's a perversion, with public sector energy going into supporting the private sector. Instead, the public sector has to set goals and a framework for how we all need to act, both individuals and the private sector."

Edited by Kitty Stapp

The writer can be reached at cbiron@ips.org

© Inter Press Service (2014) — All Rights ReservedOriginal source: Inter Press Service

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