The main objective of the World Bank’s new high-level Carbon Pricing Leadership Coalition (CPLC), according to the institution’s top climate change official, is to act as a support group for governments and companies that back assigning a cost to greenhouse gas emissions.
Officially launched this week at the UN climate summit in Paris, the coalition is aimed at providing “political cover” to government leaders who feel isolated by their views, while also attempting to tackle, with the input of the private sector, the difficult underlying issues such as carbon leakage and border tariffs, said Rachel Kyte.
But what has also materialised from the forum, which has so far signed up 20 national and sub-national governments and more than 70 corporations, is evidence of a growing discord both within companies and between them over ongoing efforts to block carbon pricing initiatives.
“Please stop lobbying against climate policies!” urged Feike Sijbesma, CEO of Dutch pharmaceutical company Royal DSM, in an open meeting of the CPLC on Monday – an emphatic comment aimed at the coalition’s other private sector members, which include some of the world’s biggest polluters.
He echoed the view of a coalition of dozens of institutional investors, which earlier this year urged nine large London-listed companies to review their membership in lobbying groups blamed for obstructing government attempts to price carbon.
Five of those companies – BHP Billiton, BP, EDF, Statoil, and Total – are also members of the CPLC, highlighting the perceived contradictions in corporate engagement efforts that are increasingly being flagged.
In addition, inconsistencies between the actions of companies’ internal departments are also being targeted by the CLPC and its members, according to Kyte, who will soon leave her role as the World Bank’s special envoy on climate change before taking up a new position as special representative of the UN Secretary General for sustainable energy and CEO of the Sustainable Energy for All (SE4All) initiative.
“Boardroom coherence and management coherence is becoming a big issue for companies,” she told Carbon Pulse on the sidelines of the Paris talks.
“We know full well that there are companies that are putting an internal price on carbon, that are leading as part of this coalition, but whose government affairs departments are still throwing a spanner in the works at every available opportunity.”
Other companies in the CPLC were hesitant to comment on the actions of fellow members, but several agreed as to the importance of harmonising what goes on internally with what is said and done externally.
“We are ensuring that there is coordination and alignment between different functions and across various levels of management … All speak the same language when it comes to our perspective on carbon pricing,” said Cedric de Meeus, who handles public affairs for cement giant LafargeHolcim.
“We have had a public position on climate change in place for many years. It is signed off by our board and guides our corporate and regional engagement to ensure we maintain a consistent message,” said Lisa Walker, vice president of environment and climate change at oil and gas producer BG Group.
“SQUEALING” ABOUT LEAKAGE
Kyte said the coalition will challenge the resistance against carbon pricing from the corporate world, much of which stems from concerns that the introduction of carbon markets or taxes will put firms at a disadvantage to rivals in countries and regions with more lenient environmental regulations.
“Some [companies are] squealing about how much they’re losing to competitors because of carbon leakage, when in actual fact it’s a fear of the future,” Kyte said.
“All of our evidence shows that leakage is something you’re going to have to take care of in the future, but it hasn’t been an extraordinarily big issue up to now because the price hasn’t been high enough.”
Kyte recognised that carbon costs in those CLPC member countries that have already put pricing mechanisms in place have started at low levels in order to make the policies more palatable for both companies and consumers.
“A number of jurisdictions have also said they are going to do it, so this is about helping them think through how they’re going to talk about it with their populations, how to make the case that this is the smart thing to do,” she said.
“This issue is a no-brainer, so we tried to generate some leadership and some political cover on that because proponents were feeling very isolated … These are heads of state that have said ‘I want to speak out on this issue, and I want to get other heads of state to take the same steps that we’re taking’.”
Kyte said the CLPC will work with government ministers and CEOs, for example taking the political goodwill demonstrated in countries’ INDC emissions reduction pledges to the UN and converting it into accelerated action to price carbon in those jurisdictions, while supporting the existing technical work going on at the national and corporate levels.
“It’s really important to have that public/private conversation. It’s not about the private sector standing on the rooftop shouting and public sector shouting back. It’s about CEOs saying ‘this has been our experience operating in a jurisdiction with a tax, or this has worked for us and what hasn’t under a trading scheme’, and governments saying ‘this is what we’ve experienced’.”
The coalition will, in turn, support the development of so-called ‘carbon clubs’, groups of countries or regions that are exploring ways of linking their emissions trading schemes or designing an overarching market between them.
In keeping with the support group imagery, Kyte suggested that the CPLC would also provide a ‘safe place’ for governments and corporations to discuss the contentious issues at length, far from the eyes of the public and the media.
“When you close the door with all the ministers and CEOs in the room, you can talk about issues of carbon leakage, efficiency, transparency … You really get into those thorny policy issues really quickly,” she added.
THE THORNIEST ISSUE?
The coalition may also attempt to tackle the difficult matter of border carbon adjustments, Kyte said, a very sensitive issue in all corners of carbon pricing discussions but one that an increasing number of observers see as an inevitability due to the expanding patchwork of national and regional GHG pricing measures emerging throughout the world.
“There are very important conversations post-Paris that have to take place, such as the whole issue of trade discussed between the UNFCCC and the WTO,” she said.
“The UNFCCC has no desire, inclination or maybe capacity to move into that middle ground, and neither does the WTO. It’s almost as if you need a ‘pop-up’ conversation around trade and climate for a couple years, and then close it down.”
The formation of the CPLC was first announced by the World Bank and the coalition’s eight inaugural governments in October, and interest has ballooned since then – a ringing endorsement for global carbon pricing efforts that many had labelled as dead due to the their rare mention in the latest negotiations and their limited appearance in the pre-Paris negotiating text.
“We’re getting letters by the day from countries who want to join,” Kyte said.
The CLPC’s government membership now stands at 20, including founding members Germany, France, Mexico, Chile, Philippines, Ethiopia, California and Rio de Janeiro city.
Italy, Spain, Netherlands, Norway, Switzerland, Belgium, Kazakhstan, Morocco, Canada and its provinces of Alberta, British Columbia, Ontario, and Quebec, make up most of the new member governments announced this week.
Kyte said the CLPC has agreed its governance structure and terms of membership, and has fashioned a set of principles that will guide the first working meeting of the member’s assembly, which is to be held during the World Bank/IMF spring meeting.
“There’s a work plan that has been agreed. The World Bank is the interim secretariat, and in April the members will elect a steering committee,” she added.
“This is a very, very important moment in time.”
By Mike Szabo – firstname.lastname@example.org