Leaders Unite in Calling for a Price on Carbon Ahead of Paris Climate Talks
IMF News, October 19, 2015
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Bibliographic details
- Published: October 19, 2015
Press release metadata
- Press Release No. 15/473
- Date: October 19, 2015
- Issued by: IMF COMMUNICATIONS DEPARTMENT, Media Relations
- Media contact: media@imf.org; Phone: 202-623-7100
Main call and purpose
- An alliance of Heads of State, city and state leaders, and heads of leading companies urge countries and companies to put a price on carbon.
- The call comes from the Carbon Pricing Panel, convened by World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde, with OECD Secretary General Angel Gurria participating.
- Objective: spur further, faster action ahead of the Paris climate talks (COP21) and steer the global economy toward a low carbon, productive, competitive future by providing certainty and predictability to the private sector for long-term climate-smart investments.
Key findings, evidence, and statistics
- Around the world, about 40 nations and 23 cities, states and regions have implemented or are putting a price on carbon.
- Programs and mechanisms currently covering about 12 percent of global greenhouse gas emissions.
- The number of implemented or scheduled carbon pricing instruments has nearly doubled since 2012.
- Aggregate market value of implemented or scheduled carbon pricing instruments: about $50 billion.
Policy analysis and recommendations
- Christine Lagarde (IMF) recommendation:
- Finance ministers should think about reforms to fiscal systems to raise more revenue from taxes on carbon-intensive fuels and less revenue from other taxes detrimental to economic performance, such as taxes on labor and capital.
- Finance ministers need to evaluate the carbon tax rates that will help them meet their mitigation pledges for Paris and consider accompanying measures to help low-income households vulnerable to higher energy prices.
- Emphasis on strong public policy to provide certainty and predictability to private investors so they can make long-term investments in climate-smart development.
- Domestic policies such as carbon pricing framed as essential complements to international agreements (e.g., COP21) for guiding collective action.
Principles and implementation guidance
- Collective experience is captured in FASTER principles developed by the World Bank Group and OECD, with input from the IMF. These principles are based on:
- fairness;
- alignment of policies and objectives;
- stability and predictability;
- transparency;
- efficiency and cost-effectiveness;
- reliability and environmental integrity.
Carbon Pricing Leadership Coalition and private sector engagement
- Private sector supporters named: US Institutional Investor CalPERS, ENGIE of France, Mahindra Group of India, and Netherlands-based Royal DSM.
- Carbon Pricing Leadership Coalition described as an action-based platform to link business needs with public policies; officially launched in Paris on November 30, 2015.
Select leader and business statements (high-level excerpts)
- Jim Yong Kim: characterizes the alliance as a turning point from debate to implementation, noting "The science is clear, the economics compelling" and urging political leadership to take green investment to scale.
- Christine Lagarde: highlights fiscal reform needs and protecting low-income households when increasing carbon prices.
- Angela Merkel: frames carbon pricing as advancing low-carbon technologies and reaching the "two degree upper limit."
- Michelle Bachelet: cites Chile's environmental taxes on transportation and power sectors, with revenues used to fund educational reform.
- François Hollande: stresses carbon prices as tangible market signals and acknowledges competitiveness concerns among carbon-intensive industries.
- Hailemariam Desalegn: warns that carbon pricing must be coordinated and not unduly fall on the poor; frames carbon price as a potential win-win.
- Benigno S. Aquino III: links carbon pricing to protecting food and water security and resilient rebuilding of vulnerable communities.
- Enrique Peña Nieto: references Mexico’s fossil fuel tax and its role in fostering clean technologies and supporting binding agreements at COP21.
- Edmund G. Brown Jr.: notes California has put a price on carbon and calls for broader government and business leadership.
- Eduardo Paes: links carbon pricing to accelerating low-carbon urban prosperity and climate-resilient infrastructure investment.
- Angel Gurría: emphasizes domestic carbon pricing as the policy driver toward a "zero net emissions future."
- Anne Stausboll (CalPERS): supports a transparent and consistent price to discourage emissions and stimulate low-carbon investment.
- Gérard Mestrallet (ENGIE): notes ENGIE has put a price on carbon internally and ceased developing new coal generation projects not already legally engaged.
- Anand Mahindra (Mahindra Group): frames growth and sustainability as complementary, with emerging countries leveraging technology for low-carbon growth.
- Feike Sijbesma (Royal DSM): states DSM uses an internal carbon price of €50 to guide economic and environmental decisions.
Contacts for follow-up
- World Bank (Washington): Camille Funnell, (202) 294-4804, cfunnell@worldbank.org
- IMF (Washington): Keiko Utsunomiya, (202) 623-7090, kutsunomiya@imf.org
- For Broadcast Requests: Mehreen Sheikh, (202) 458-7336, msheikh1@worldbankgroup.org
Leaders Unite in Calling for a Price on Carbon Ahead of Paris Climate Talks — Press Release No. 15/473, October 19, 2015