On the 12th of November in COP29, Baku, Azerbaijan, leaders and experts from Canada, Germany, Finland and the WTO, OECD, IMF, and World Bank came together for a high-level panel on carbon pricing at the invitation of Climate Leadership Coalition. For forerunning companies, carbon pricing is the single most important tool in supporting global climate mitigation and helping create a predictable investment environment.
In his keynote, the President of Finland, Alexander Stubb, stressed the need for international collaboration in climate mitigation: “I am an avid multilateralist,” he stated. “I still think that [the WTO, IMF, World Bank and OECD] are, in many ways, the foundation of the multilateral system that we have.”
The crucial role of the coherence of climate and trade policies was stressed by several speakers, including WTO Director-General Dr. Ngozi Okonjo-Iweala: “Moving forward with carbon pricing would accentuate the green comparative advantage, create new incentives and to bring previously marginalized developing countries into global supply networks”, she stated, “But it can only happen if policies, pricing and standards work seamlessly together.” The importance of trade cooperation was also highlighted by Jo Tyndall (Environment Director, OECD) and noted in a report published earlier this fall by the international economic organizations. The report was prominently discussed during the event and represents a joint effort by the WTO, OECD, IMF and the World Bank to bring carbon pricing collaboration to the forefront.
The full house event confirmed that carbon pricing as a topic is rising in prominence and is a key tool in creating a level-playing field for companies and investors while moving fast with climate mitigation policies. John W.H. Denton AO, Secretary General of the ICC, highlighted the real cost of inaction on climate and the critical sense of urgency that follows.He also raised a rapid breakthrough on Article 6 as a first step towards the strengthening of global pricing frameworks: “I would like to see Article 6 dealt with as a first order issue. Otherwise, it may be held hostage by the financing discussions.”
Canadian Minister of Environment and Climate Change, Steven Guilbeault, outlined that “Canada is a firm believer in the value of pricing carbon pollution because we know it’s the most cost-effective way to fight climate change”. The governments of Canada and Germany called for the development of global guidelines to align national mechanisms. Without concentrated efforts, carbon prices will remain too low to drive effective mitigation, and investments in climate solutions will fall short of what is necessary. Berthold Goeke, Director General on Climate Action at the German economic affairs ministry, also mentioned the EU Carbon Border Adjustment Mechanism (CBAM) as a key instrument against carbon leakage.
Amidst general calls for harmonization, World Bank chief economist Stephane Hallegatte nevertheless concluded that every country has their own path to carbon neutrality, and that local policies must be built sequentially over time. IMF Deputy Director Ruud de Mooij also brought up the paradox of carbon pricing: while it is the most efficient way to cut emissions, it is also the least favored. One way to combat this discrepancy could be the addition of compensative elements to pricing packages.
Alexander Stubb, summarized that in a multipolar world, crises can only be solved through multilateral cooperation: “A good starting point for is for the global West to understand that we need to rebalance the global institutions and give agency to countries and regions of the world that did not -- have agency.” To solve the climate crisis, we need regulatory targets, public and private finance and technological innovations, and these must all be reached in a global level playing field, which carbon pricing can enable.
The event was a continuation of CLC’s collaboration with international organizations to promote carbon pricing, and it reinforced the participants' commitment to this common goal. It also highlighted new perspectives for expanding carbon pricing and underscored the urgency of the matter. This collaboration to advance carbon pricing is building up momentum towards COP30 in Belém, Brazil. In COP30, countries are expected to reveal their new commitments as well as the tools for reaching them – we hope to see carbon pricing as a key part of the toolbox.
The Call on Carbon initiative was launched by Climate Leadership Coalition, Haga Initiative and Skift Business Climate Leaders in 2021. By this day, over 150 businesses, cities, universities and business associations with over USD 25 trillion market capitalisation and over USD 120 trillion assets under management in over 100 countries call on governments to ramp up carbon pricing.
More information: Tuuli Kaskinen, CEO, Climate Leadership Coalition, tuuli.kaskinen@clc.fi, +358 50 5149752.
