PARIS, 2 December – A group of business leaders is keeping the pressure on negotiators to ensure a role for carbon pricing and markets in the Paris Agreement.

At a special event in the IETA/WBCSD Open for Business Hub, representatives from 15 business groups – representing more than 100,000 business around the world – will talk about why carbon pricing is crucial to them and why markets matter for the climate change agreement being negotiated here in the French capital.

The event, being held at 5pm today, follows on from a letter that IETA along with 20 other business groups sent to more than 90 governments and UN climate chief Christiana Figueres in October, highlighting the importance of carbon markets to the future agreement. It also called for three simple elements to be included: provisions to encourage countries to cooperate in meeting their mitigation commitments by enabling system linkages; rules to account for international emissions reduction unit transfers; and tools to accelerate links between carbon pricing systems, such as a central project crediting mechanism.

“Markets can take off from a simple provision in the Paris Agreement, with more elaborated rules in a decision – as we saw 18 years ago, with the Kyoto Protocol,” says Dirk Forrister, IETA’s CEO and President. “The three ‘asks’ from business on markets would help undergird the next wave of climate action and allow for action to start before 2020. The longer we delay, the more expensive it will be.”

“More than 80 governments state in their Paris pledges that they can achieve even greater emissions reductions if they have access to markets, while business has been clear on the need for signals from Paris to mobilise much-needed capital,” he adds. “Negotiators need to ensure that these ambitions are given the right frameworks to flourish.”

“We need a price on carbon – the WBCSD has been clear on this point for many years,” says Peter Bakker, President of the WBCSD. “In Paris this week, more than 20 business focused organisations and associations are sending a clear message to governments that carbon pricing and market provisions are a crucial element of the Paris Agreement. This needs to come into place so that individual nations can set even more ambitious emissions reduction targets and business can work together with governments to ensure that the rise in global temperatures is limited to under 2°C.”

He adds: “Business is actively calling for a price on carbon, we stand ready to do our part, and now it is time for governments to follow our lead.”

The document listing the statements from the 18 business groups that joined the initiative is available here.

IETA has a team on the ground for the duration of the Paris meeting, covering market mechanisms, REDD+, climate finance and the overarching deal. Please contact Katie Kouchakji on kouchakji@ieta.org for any enquiries.

We will also be running a series of events in the IETA/WBCSD Pavilion, located in Hall 3, including daily media briefings at 10.30am CET. Please see our dedicated COP 21 website for more information.

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ICROA is an international best practice programme for carbon management and offsetting. ICROA is managed by IETA a non for profit business association housing over 140 global businesses and a leading voice on climate policy.

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LONDON, 25 November – Governments need to ensure a new international climate change agreement is reached at the Paris climate talks – and that it includes a role for market-based mechanisms, IETA says today.

LONDON, 19 November – A growing wave of carbon market activity provides good momentum for the climate talks in Paris – and has valuable lessons for the future markets, as showcased in IETA’s GHG Market Report 2015/16.

Entitled Making Waves, this year’s report captures the momentum driving carbon markets, from the tiny ripple of policy support in the Kyoto Protocol out to the latest developments in Ontario, the aviation sector, and beyond. Each section opens with a “memo to policy-makers”, laying out the lessons from each wave of activity. 

“With the approach of COP 21, this report emphasises the opportunity for countries to send out strong policy signals from Paris to prompt the next wave of climate action through markets,” says Dirk Forrister, President and CEO of IETA. “The momentum from a solid agreement could ripple out across the world – and provide a basis for cooperation through carbon markets far into the future.”

He adds: “This year’s report shows how just a few lines in the Kyoto Protocol mobilised the private sector and led to the EU’s pioneering emissions trading system, and the ripple effect from those early steps.”

The report opens with an overview of carbon market developments by Environmental Defense Fund President Fred Krupp and Vice-President Nathaniel Keohane. It then considers different models for linkage between varying pricing systems in an article by Joseph Aldy, Robert Stowe and Bianca Sylvester; an extended version of this study was released earlier this week. An extract from IETA’s forthcoming oral history project is also included, looking at the early years of market activity immediately after the Kyoto Protocol was agreed in 1997.

Other contributors to the report include Ontario’s Minister of the Environment and Climate Change Glen Murray, Connie Hedegaard’s former head of cabinet Peter Vis, RGGI chairwoman Katie Dykes, Shell’s chief climate change adviser David Hone, PwC UK Director of climate change Jonathan Grant, and AGL’s Manager of carbon and renewable policy Cameron Reid.

“Making Waves is also a call to action: it’s about using market forces to disrupt the rising levels of greenhouse gas emissions,” says Forrister. “More than 40% of global GDP is already subject to a carbon market – a share that is set to rise dramatically in the next few years, with potential markets emerging in China and the United States. The Paris agreement is a prime opportunity to forge a link for the next wave of market activity.”

BONN, 23 October – Commenting on the close of this week’s climate negotiations in Bonn, Germany, IETA’s Director of International Policy Jeff Swartz says:

“We welcome progress made this week on advancing the text for the Paris agreement, despite divisions over climate finance. Parties managed to focus on the job at hand, and made headway on the negotiating text for Paris.”

“IETA is particularly pleased to see a more robust section on mitigation that clarifies the market provisions.  It now makes clear that countries can cooperate on markets with proper accounting of transfers, and it sets policy to avoid double-counting of emissions reductions. It also creates a sustainable development crediting mechanism. All three of these provisions are similar to what we and 19 other business groups called for at the start of the week in a letter sent to more than 90 governments.  

“There are also several references to ‘international transferrable mitigation outcomes’, which is in line with what IETA has been proposing to governments for more than a year. This new text is a solid basis to work from going in to the Paris talks in five weeks’ time.”

The new text is available on the UNFCCC website.

LONDON, 20 October – Business-focused organisations and associations from around the world joined forces today to call on governments to ensure that the Paris climate change agreement supports international cooperation through market-based measures.

In a letter issued to more than 90 governments at the start of negotiations in Bonn this week, the group¹ urged ministers to include elements to undergird markets in both the Paris Agreement and Decisions relating to the deal. The letter was sent to Ministers in the US, China, India, Indonesia, Russia, the EU, Canada, Mexico, South Korea, Brazil, along with more than 80 other countries. A copy was also sent to UNFCCC Executive Secretary Christiana Figueres.

The letter came in response to a new draft that the Co-Chairs of the ADP talks released earlier this month. Their proposed texts made significant strides in consolidating the core elements of the agreement into a few short pages. However, the draft contains few provisions to support the use of market mechanisms. For example, the Agreement text lacks clear rules on how to account for international emissions reduction unit transfers between countries. Similarly, their proposed draft Decisions include a mention of a potential crediting mechanism for emission reduction projects, but it is conditioned on future decisions before becoming operational.

“Businesses around the world remain concerned that, at this late juncture of the negotiations, important market provisions remain unclear,” says Dirk Forrister, IETA’s President and CEO. “Given the need to ensure any future climate change policies achieve their objectives while keeping costs down, market mechanisms need to be part of the solution.”

“Carbon pricing is one of the most powerful mechanisms we can put in place to reduce emissions and speed the transition to a low-carbon economy,” says Peter Bakker, President and CEO of the World Business Council for Sustainable Development. “Many companies are already using internal carbon prices, and the external call for a formal carbon price has grown stronger across the world during 2015. This is a united call for action from the business community as we head towards the historic climate negotiations in Paris this December.”

“As more and more governments move forward with carbon pricing, the Paris agreement offers a critical opportunity for strengthening the global carbon market,” says Bob Perciasepe, President of the Center for Climate and Energy Solutions. “By requiring sound accounting of international trading, the agreement can facilitate the growth and credibility of the carbon market, a critical tool for cost-effective emissions reduction.”

“We believe that market-based mechanisms, such as carbon markets, are the most effective tool for mitigating greenhouse gas emissions and stimulating investments in low-carbon technologies and energy efficiency,” says Hans ten Berge, Secretary General of EURELECTRIC. “The importance of carbon markets should be anchored in the new climate change regime with a view to enabling the development of a global carbon market in the longer term.”

“Australian businesses recognise the importance of having robust and credible processes to underwrite international linkage of efforts to reduce greenhouse gas emissions,” say Jennifer Westacott, Chief Executive of the BCA, and Innes Willox, Ai Group’s Chief Executive.

“The Council believes that market-based mechanisms are proven, cost-effective tools for achieving national mitigation goals,” says Lisa Jacobson, President of the Business Council for Sustainable Energy. “Countries are setting the global pathway forward in Paris and market-based mechanisms should be recognised as tools to help transform the energy sector and grow national economies.”

“Carbon markets and carbon pricing are the creation of policy-makers,” says Richard Folland, Executive Director, Climate Markets and Investment Association. “Market participants around the world will be looking for signals from the negotiators in Bonn this week that they support carbon pricing as a key instrument in tackling climate change at the global level.”

“Market-based instruments, such as the EU ETS, are of key importance in order to reduce emissions and deploy climate solutions cost-efficiently,” says Troels Ranis, Director of the Confederation of Danish Industry. “Efforts and initiatives to promote this tool internationally are most welcome and supported by Danish Industry.” “Sound and efficient carbon markets continue to be the most cost-effective way to reach the world’s agreed climate goals,” says Beate Raabe, Secretary General of Eurogas.

“Businesses and investors around the world are calling for carbon pricing is one of the key policies to help harness the power of markets in tackling climate change,” says Nigel Topping, CEO of We Mean Business. “Over 1000 companies are already implementing internal carbon prices, in anticipation of regulation. Whether in the form of carbon taxes or cap-and-trade systems, smart carbon pricing policies will be fundamental in giving investors, businesses and governments a clear economic signal to drive investment in a cleaner energy future.”

“We look forward to the Paris conference, as the commitments submitted by the Parties have generated a positive setting,” says Juha Naukkarinen, Managing Director of Finnish Energy. “However, we are concerned whether the agreement will convince investors all around the globe that carbon price will become a significant factor in their business. Clear support for global market mechanisms will help Europe to continue strengthening its market-based climate policy with a view to carbon neutral energy by 2050.”

NOTES

LONDON, 5 October – Today’s release of a new draft agreement and decisions for the upcoming Paris climate talks is an important step towards a new international agreement on climate change, says IETA. However, it is critical that negotiators provide clear rules for countries that intend to cooperate through market-based approaches.

The new text, released on Monday morning, is more streamlined than previous versions, running to only nine pages for the draft agreement and an additional 10 pages on draft COP decisions. It spells out elements for a new agreement – spanning issues such as climate change mitigation, adaptation, technology transfer and finance – as well as decisions to operationalise the agreement.

Disappointingly, the draft agreement has few provisions  to support the use of market mechanisms, nor does it specify rules to account for international emissions reduction unit transfers. The draft decisions contain several provisions which would support the use of market-based mechanisms to fulfil pledges, but they remain in brackets – meaning they are yet to be agreed.

“Having a more concise text at this stage of the process is welcome – particularly as governments prepare for a final week-long negotiating session later this month, ahead of the Paris talks,” says Dirk Forrister, IETA’s President and CEO. “However, it is still unclear whether the agreement will feature rules to encourage cooperation through carbon markets, with many key provisions still to be agreed.”

He adds: “Businesses all over the world have consistently called for carbon pricing to form a part of the new agreement. With the profound concerns that business and government share in ensuring cost effectiveness, market provisions need to be at the heart of the agreement.  China is set to launch the world’s largest carbon market in 2017, adding to the 40% of global GDP¹ already subject to emissions trading. These efforts need to recognised and encouraged in a future rules-based agreement.” 

NOTES

1 According to the International Carbon Action Partnership’s 2015 status report. 

You can access this press release here.

NEW YORK, 25 September – China’s announcement of its national emissions trading system plans is a boost for international climate negotiations – and for the role of market mechanisms in the 2015 climate agreement.

China’s President Xi Jinping is expected to announce today that the country’s national ETS will begin in 2017, building on the seven pilot market systems that have been operating in the country since 2013. When launched, the Chinese ETS will be the world’s largest.

IETA has been increasingly active in China in recent years, including through five business-to-business ETS dialogues around the country as part of the Business Partnership for Market Readiness, which has given hundreds of Chinese firms the opportunity to discuss carbon management with European and Californian practitioners. IETA is also consulting with Chinese authorities on the design of the national market system.

This step by the world’s largest emitter to use cap and trade to reduce its greenhouse gas emissions adds to the momentum leading to the Paris climate negotiations at the end of this year, expected to culminate with a new international climate change agreement. It is also a signal that the new agreement needs to ensure a role for market mechanisms for those that wish to use such systems to fulfil their contributions.

“Today’s announcement by President Xi is a welcome signal that governments around the world are taking the climate threat seriously and that market mechanisms can help,” says IETA CEO & President Dirk Forrister. “We hope that negotiators take today’s announcement as another signal that the 2015 climate agreement needs to recognise markets. China joins a growing number of countries that recognise, when it comes to cutting emissions and keeping costs down, markets matter.”

“China has had positive experiences with markets to cut emissions, starting with the Clean Development Mechanism and, more recently, the seven pilot systems,” says Jeff Swartz, IETA’s Director of International Policy. “IETA and our members look forward to engaging with the Chinese government as it looks to roll-out the next phase of its carbon market.”

Earlier this year, IETA and CDC Climat Research released an update to the China case study, as part of the World's Carbon Market series, chronicling market developments.

You can access this press release here.

LONDON, 22 September – ICROA is pleased to announce that it is partnering with the UN on the Climate Neutral Now campaign, which aims to drive governments, business and individuals to offset their emissions and support global climate efforts.  

The campaign, launched today in New York, is part of a drive to raise public awareness of offsetting and its benefits in the run-up to the climate talks in Paris at the end of this year, where a new global agreement to fight climate change is to be agreed. Leading businesses such as Microsoft and retailer Marks & Spencer are supporting the initiative, as are Hollywood actor Edward Norton and fashion designer Vivienne Westwood.

The partnership with ICROA will allow the UN to offer businesses a comprehensive service on carbon management and lower global carbon emissions through the delivery of carbon finance to emission reduction projects around the world.

“Climate Neutral Now is a great initiative to raise awareness among business about its climate impacts and how these can be offset,” says IETA CEO & President Dirk Forrister. “IETA, ICROA and all our members are ready to help any businesses that are prepared to take this step.”

He adds: “For the world to meet the goal of limiting global warming to 2°C, it is vital that business takes action. Climate Neutral Now is a great way of using market forces to make a difference.”

“ICROA is proud to partner with the UN on this voluntary initiative,” says Sophy Greenhalgh, ICROA’s director. “ICROA has for a long time worked with business to take action on climate. We are delighted that the UN is actively promoting the importance of voluntary offsetting at this critical time and encourage all to get involved and make a positive impact by becoming Climate Neutral Now.”

“The private sector plays a vital role in working toward climate neutrality,” says Niclas Svenningsen, Manager, Design of Strategic Initiatives at UNFCCC. “We are delighted to be working with ICROA and grateful for their support in helping companies measure and reduce their climate footprint.”

More information on the Climate Neutral Now campaign, please see http://climateneutralnow.org.

Download the press release here.