World Bank Calls for Carbon Pricing
By Dan Sherman
It is said that there is nothing more powerful than an idea whose time has come. Evidently UN Secretary General Ban Ki-Moon feels the time has come to discuss the idea of shifting to a low-carbon economy.
The Secretary General has called for a summit to focus on climate change in advance of the climate treaty negotiation conference in Paris in 2015. According to the UN, the summit “is aimed at catalyzing action by governments, business, finance, industry, and civil society in areas for new commitments and substantial, scalable and replicable contributions… that will help the world shift toward a low-carbon economy.”
In line with that goal, the World Bank has issued a statement requesting action from governments, sub-national jurisdictions, corporations, and other bodies to institute initiatives to control carbon emissions. The Bank recognizes that each group or government’s position is unique; therefore, the most effective tool for controlling greenhouse gas production will vary from body to body.
The World Bank, however, states that: “[p]ricing carbon is inevitable if we are to produce a package of effective and cost-efficient policies to support scaled up mitigation.” The Bank suggests changes which include “domestic emissions trading systems, carbon taxes, use of a social cost of carbon, and/or payments for emission reductions.”
The Bank recognizes that carbon pricing has already been implemented in a serious way. Currently, 22% of all carbon emissions, worldwide, are accounted for by active scheduling of carbon trading or taxing systems. Further, over 100 companies now disclose to the Carbon Disclosure Project (CDP) that they use internal carbon pricing tools in their business analysis.
Despite the progress that’s been made in bringing carbon emissions under control, far more needs to be done to mitigate greenhouse gas production. Should we fail to do so, the economic cost would be in the hundreds of billions of dollars for the United States alone; and costs could be in the trillions worldwide. We may also expect to see more deaths from heatstroke and severe storms and reduced crop yields are likely, among other things.
Instituting a carbon price creates a financial incentive for businesses to direct investments in a way that reduces the amount of carbon produced by their operations, thus reducing total carbon emissions and mitigating the effects of climate change.
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Posted: September 15, 2014