Experts urge G20 to co-ordinate carbon pricing to quell competitiveness fears

Published 05:01 on October 8, 2015  /  Last updated at 10:57 on October 8, 2015  /  Americas, Asia Pacific, Carbon Taxes, Climate Talks, EMEA, International  /  No Comments

The Group of 20 major economies should cooperate to expand and strengthen their carbon pricing policies to overcome competitive concerns, starting at next month’s summit in Turkey, according to the New Climate Economy, an international group of experts and academics.

The Group of 20 major economies should cooperate to expand and strengthen their carbon pricing policies to overcome competitive concerns, starting at next month’s summit in Turkey, according to the New Climate Economy, an international group of experts and academics.

The call came as the group published Implementing Effective Carbon Pricing, a working paper, on Thursday, which included a comprehensive section on carbon leakage.

The paper recommends the G20 should commit to establishing clear, credible and rising explicit carbon prices across their economies, at their annual summit in Antalya as a first step. All of them should have these in place by 2020, along with phasing out fossil fuel subsidies.

Using IEA modelling scenarios, the report found that this could save 2.8-5.6 billlion tonnes of CO2e in 2030 if carbon prices increased to an average of US$75/t  in developed countries and US$35/t in developing countries by then.

It also urged the G20 to prioritise the use of resulting carbon pricing revenues to offset impacts on low-income households and to develop that during the Chinese G20 presidency in 2016.

“We now have the experience and momentum to coordinate the introduction of carbon pricing across G20 countries, and beyond. This will help to reduce competitiveness concerns and avoid second-best policy options such as border carbon adjustments,” said James Rydge, the group’s lead economist and author of the paper in a statement.

“The coming decades will involve major structural transformations and economies that embrace innovation and change will do better. Governments are realising that carbon pricing is central to structural reforms for managing economic change and the climate risks they will face. Cooperation can help to accelerate the introduction of effective carbon pricing.”

NO LEAKAGE EVIDENCE

The paper found that concerns over industrial competitiveness have not materialised in practice.

It said many countries have limited the effectiveness of their carbon pricing policies, keeping prices below $10 per tonne and freely allocating carbon allowances to big-emitting industries, fearing the added costs will hamper their ability to compete with rival firms located in countries without such policies.

“International cooperation can also help overcome these concerns by levelling the playing field across countries,” the paper said.

G20 nations emit around four-fifths of global carbon dioxide emissions and co-ordinated climate action could take a substantial step in reining in global warming.

For the rest of the world, the New Climate Economy recommended to start by mandating monitoring, reporting and verification (MRV) of emissions for businesses and industry.

The New Climate Economy is part of the Global Commission on the Economy and Climate, a body of former political leaders and senior figures in business, investing and economics. It is co-chaired by ex-Mexico president Felipe Calderon and UK economist Nicholas Stern and set up to examine how countries can achieve economic growth while dealing with the risks posed by climate change.

By Ben Garside – ben@carbon-pulse.com

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