Climate Civics, Policy Design, Workstreams

Carbon Pricing Workstream

The Carbon Pricing Workstream was an always-active venue for dialogue, analysis, and outcome-focused policy work relating to carbon pricing, which ran from early 2014 through 2016. In 2015, a core group of volunteers, working through the CPW, helped to establish language defining universal principles for effective, efficient, equitable carbon pricing. Past activities and an online reference designed to give anyone interested in carbon pricing the basic information needed to productively engage in the CPW are available in the CPW Memory Bank.

4 Ways to Accelerate Carbon Pricing

January 9, 2017

There are four crucial ways the work of a new high-level economic commission can motivate the wider and deeper activation of the engage4climate Core Principles for optimal carbon pricing policy design, attuned to the unique needs and capabilities of any jurisdiction: 1) Alignment; 2) Revenues; 3) Catalyzing Investment; 4) Shifting Subsidies. [Click here for the full article]

Prepping for COP22: with Joseph Robertson

November 4, 2016

On October 27, 2016, the Carbon Pricing Workstream met with Joseph Robertson, Citizens’ Climate Lobby’s (CCL) Global Strategy Director. Joe discussed CCL’s “10/10 strategy” and plans for CCEN’s engagement at the COP22 meeting in Marrakech, November 7 to 18, 2016.

The Role of Carbon Pricing in Implementing the Paris Agreement

October 20, 2016

Resources for the Future & International Monetary Fund Seminar (October 2016), The Role of Carbon Pricing in Implementing the Paris Agreement (video, audio and PowerPoint available). Richard G. Newell, RFF President & CEO; Nancy Birdsall, Founding President, Center for Global Development; Vitor Gaspar, Director, Fiscal Affairs Department, International Monetary Fund; Andrew Steer, President and CEO, World Resources Institute.

OECD Pricing CO2 through Taxes and Emissions Trading Systems

September 30, 2016

A deep dive into EU carbon pricing policy, this report also gives individual country reports for you to look into.  This report is the first comprehensive analysis of the extent to which countries use carbon prices. It measures effective carbon rates, the price of carbon emissions resulting from taxes and emission trading systems, in 41 OECD and G20 countries, accounting for 80% of global energy use and of CO2 emissions. You can find the report here: OECD Pricing CO2 through Taxes and Emissions Trading Systems

Also new this month is a Climate Action Network (CAN) Europe report on their position on the post-2020 ETS reform.

11 Essential Questions for Designing a
Policy to Price Carbon with Adele Morris

September 30, 2016

On September 29th Adele Morris, senior fellow and policy director for Climate and Energy Economics at the Brookings Institution, engaged the CPW in a conversation on her latest paper: 11 Essential Questions for Designing a Policy to Price Carbon. This paper was designed as a decision memo for policy makers who would need to wrestle with crafting legislation on carbon pricing.

Adele explains the different section of the paper and fields questions and comments from participants on topics including:

  1. What is the name of the carbon pricing policy?
  2. What greenhouse gas (GHG) sources and gases does the policy cover?
  3. What’s the initial price and how does it change over time?
  4. Who pays the carbon charge?
  5. Who collects the revenue?
  6. What happens to the revenue?
  7. Does it change other Federal climate and energy policies, and if so how?
  8. Does it constrain state-level policies?
  9. Does it allow offsets (alternatives to paying a fee)?
  10. Does it give credits or rebates for certain activities?
  11. Does it include measures to reduce effects on U.S. competitiveness and emissions leakage?

A Conversation with EDF’s Alex Hanafi

August 18, 2016

On August 11th, the CPW met with Alex Hanafi, the Senior Manager of Multilateral Climate Strategy and a Senior Attorney in the Environmental Defense Fund’s Global Climate program. Alex lead a conversation on how unresolved understandings within article 6 of the Paris Agreement (page 24) could impact the development of carbon pricing. Alex also discussed how  “minilateral” carbon market coalitions could establish much needed standards.

Update: CPW Memory Bank Now Live

July 31, 2016

The CPW Memory Bank is an online reference designed to give anyone interested in carbon pricing the basic information needed to productively engage in the CPW. In it you can find:

Contact CPW co-facilitators Don Kraus or Jim Sandoe if you have items you believe should be added to the Memory Bank.  It’s a work in progress.

Update: CPLC High-Level Assembly

April 15, 2016

The Carbon Pricing Leadership Coalition held its inaugural governing Assembly on Friday, April 15, 2016, at the headquarters of the World Bank in Washington, DC. Ségolène Royal, Minster of Environment for France, and Feike Sijbesma, CEO of Royal DSM, co-chaired the Assembly. They were joined at the table by Jim Yong Kim, World Bank Group President; Ban Ki-moon, United Nations Secretary-General; Christine Lagarde, Managing Director of the International Monetary Fund; Angel Gurría, Secretary-General of the Organisation for Economic Cooperation and Development, and Prime Minister Daniel Kablan Duncan of Côte d’Ivoire. [Read the full article here…]

Update: CPW Memory Bank now in design phase

April 15, 2016

During a CPW planning session alongside the Civil Society Policy Forum at the World Bank, members of the Carbon Pricing Workstream leadership team decided to create a Memory Bank, which will help new participants catch up on past work, trace the pathways through which certain open questions have been dealt with, and provide an overall background reservoir of information on carbon pricing policy design and principles. We will be adding materials from partners and from other sources, and this is now expected to become a standard for each of the CCEN Workstreams.

Update: Chatham House rules dialogue examines carbon pricing value chain

April 14, 2016

As part of the series Accelerating Progress, Advancing Innovation, convened under Chatham House rules, participants from business, legal practice, economics, civil society, and government, came together to explore challenges and complexities related to mapping and communicating a carbon pricing value chain. The work in the room involved more opening than closing of questions, and suggested a need to create an adaptive, evolving process of information sharing and advice on best practices, both in pricing carbon and in steering the investment transition day to day. [Event page]

Update: Canada to set minimum national carbon price

February 17, 2016

The federal government of Canada will establish a national minimum price on carbon emissions. The move is historic, as it will provide a common denominator for various carbon pricing strategies implemented at the provincial level, and move the oil-rich nation onto a path toward a resilient, low-carbon economy.

On November 30, 2015, Canada officially joined the Carbon Pricing Leadership Coalition and Prime Minister Trudeau joined the high-level panel to promote its work.

Update: CPLC Working Groups Get Down to Business

January 26, 2016

The Carbon Pricing Leadership Coalition is now officially beginning operations. Partners to the Coalition—including businesses, investor groups, governments, NGOs, and intergovernmental agencies—are forming three working groups to focus on Building the Evidence Base, Mobilizing Businesses, and Convening Leadership Dialogues.

These working groups are now building momentum for concrete actions to be considered and promoted through the first Annual Assembly of the CPLC, on April 15.

Post-Paris Update #1: IMF calls for Carbon Price on Shipping, Aviation

January 29, 2016

The International Monetary Fund has published a report calling for a carbon tax on shipping and aviation. The argument is very simple: these particular emissions cause widespread economic distortion and are a hidden drag on the build-up of new economic value; correcting for that error gives us a more efficient economy and a healthier future.

Commercial shipping and aviation are the two segments of the transport sector considered least likely to transition to electric power in the near term, so a low-cost economy-wide strategy for motivating change is necessary to build new efficiencies, and a sectoral pricing strategy could add leverage to efforts to innovate within that sector.

Updates from Paris

December 13, 2015

Article 4 of the Agreement, Paragraph 13, for instance, calls for Parties to

promote environmental integrity, transparency, accuracy, completeness, comparability and consistency, and ensure the avoidance of double counting…

All of these are related to principles for effective, efficient carbon pricing, and echo both the Pathway to Paris Core Principles and the FASTER Principles put forward by the World Bank and the OECD after consultation with the IMF and with CPLC partners. While there is no mention of carbon pricing in this section, the Agreement clearly sets standards for designing effective carbon pricing strategies.

The words “carbon pricing” appear in Paragraph 137 of the Decision to adopt the Paris Agreement, alongside “domestic policies” that can drive “non-state stakeholders” to transition away from climate forcing fuels.

Join a new global forum for discussion of the text, through our Text-Tracking Workstream, or just go to: http://citizens.network

Sorting through Options, Establishing Principles

November 27, 2015

Between April 2015 and August 2015, the Carbon Pricing Workstream proposed, refined, and adjusted draft language for including universal principles and key design elements of effective, efficient, equitable carbon pricing in the Paris agreement.

When the Carbon Pricing Workstream began work on draft language for the international agreement, two things became apparent:

  1. There had never been a true commitment to outline universally applicable principles for carbon pricing that would look at all of the options available and establish core standards, and…
  2. There was a tremendous amount of complexity built into language regarding carbon pricing, due to the rules set forth for CDM and markets in the Kyoto Protocol.

Both of these observations related to the difficulties inherent in trying to push all existing language into the Paris agreement.

The goal of the work on draft language was to:

  1. Establish viable universal principles for effective, efficient, equitable carbon pricing, and…
  2. Streamline existing language, while ensuring the menu of options would include upstream fees and revenue return to households as clear options.

In order to streamline the existing language—which related almost exclusively to emissions trading markets and regulatory mechanisms for their enforcement or enhancement—it was necessary to outline a simple list of policy design elements, which might be applied individually or in some combination to set in motion the implementation of viable universal principles.

This process led to the following draft language, where for the first time in an international agreement, upstream fees and revenue return would stand alongside the mechanisms already established in prior agreements.

DRAFT CARBON PRICING LANGUAGE

Principles

Effective carbon pricing follows these principles: reduce absolute emissions; simple, transparent and economically efficient; economy-wide; prevent market distortions and leakage; internalize costs incrementally; provide clear market signals; harmonize across borders, systems, and jurisdictions; build economic value at the human scale; achieve an effective, reliable price that rises predictably and responds to evolving scientific data.

Elements

Elements of an effective carbon pricing strategy [consists of, inter alia:] [might include, but are not limited to:]

  1. A Carbon Fee, tax or other clearly defined price assessment per ton of CO2 equivalent emissions, emissions equivalent or emissions potential.
  2. A cap or limit on total volume of emissions allowed, enforced through a process that issues permits for allowable emissions adding up to the total volume of emissions allowed.
  3. Revenues [returned] according to the economic, environmental and social intentions, principles and objectives of this [Agreement] [Package] [Framework].
  4. Credits for certified emissions reductions or commodity units per metric ton of CO2 equivalent emissions that can be bought, sold, transferred or traded through designated private and/or public entities.
  5. A market structure within which such permits might be traded, either among permit holders or in a wider population of buyers and sellers.
  6. Consideration of national circumstances and respective capabilities when deciding the most efficient, effective and inclusive instrument and design elements for a given jurisdiction.

NOTE on the draft text

This text is evolving. It aims to ensure viable carbon pricing strategies are not left out of the menu of options offered to the 196 Parties to the UNFCCC, which will elaborate their own national climate strategies, during the 2015-2020 period, and to ensure that those options are designed in such a way as to adhere to universal principles that foster economically efficient, environmentally effective, socially equitable economy-wide strategies for removing future climate harm from our day to day activities.