Could carbon pricing still play a role in Paris climate talks?

Jessica Shankleman
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The latest negotiating text contains little on market mechanisms, disappointing those businesses calling for a global carbon price

A global deal on climate change could yet include ambitious language to encourage countries to put a price on carbon emissions, even though the latest text remains sparse on details when it comes to the potential use of market mechanisms.

That is the view of Jonathan Grant, director of sustainability and climate change at PwC, who this week argued more than a thousand businesses were likely to be left disappointed by the lack of a commitment to a global carbon price in the latest version of the UN negotiating text.

Late last year, more than 70 countries and thousands of businesses underlined their commitment to putting a price on CO2, arguing that a clear carbon price would highlight the economic costs of climate change and provide a clear incentive for investment in clean technologies.

But it remains to be seen how carbon pricing could be inserted into the prospective climate change deal, which is expected to be finalised at this year's Paris Summit. Many business leaders and policy experts now fear say the call for a global price on carbon came too late in the negotiating process for it to be included in a deal.

Speaking to reporters yesterday, Grant, who is also a co-chair of the International Emissions Trading Association (IETA) UN working group, complained the latest text contained little reference to carbon markets. "We have been advocating for the inclusion of market mechanisms for as long as the negotiations have been going on," he said. "So to see such limited references is disappointing."

However, he insisted there is "still time" to rectify the omission as the negotiations proceed.

The latest text - which is officially designated as a "non paper" - was released on Friday by the co-chairs of the UN's climate change talks. It marked the latest attempt at whittling down the lengthy text drawn up by negotiators at the most recent round of official UN talks in Bonn earlier this year. The two co-chairs, Ahmed Djoghlaf and Daniel Reifsnyder, succeeded in eliminating 10 pages, reducing the text to 76 pages, and reorganised the document into three key sections. The text now clearly delineates ideas that are expected to form part of a legally binding agreement, decisions that will not be legally binding, and a final, large section on ideas that do not yet have a home.

Plans for "market based mechanisms" to tackle emissions currently fall into the third category, "ideas that do not yet have a home". A spokesman for the UN's climate change secretariat told BusinessGreen there was still some chance the clause could be included in the agreement.

"The placement in part III means that governments still need to come to a view on whether market mechanisms should be included in the agreement," he said in an emailed statement. "In other words, they could potentially still be part of an agreement."

The co-chairs stressed the latest version of the text is not official and must still be agreed by other members of their working group.

However, Grant said overall it seemed the co-chairs had failed to cut much out of the previous text in a bid to keep all countries happy. "Countries are probably disappointed that it's as long as it is, but they'd be more disappointed if their options had been cut," he said.

Confirming Grant's suspicions, French climate ambassador Laurence Tubiana expressed concerns this week that the talks were proceeding too slowly, warning that it remained "conceptually difficult" to reach an agreement on climate finance that would keep all parties happy. 

Kiran Sura, head of advocacy for the Climate & Development Knowledge Network, said it was crucial the text moved forward at the next negotiations due to be held in Bonn next month.

"If the parties arrive in Bonn and don't roll up their sleeves and start negotiating, then the co-chairs will need to find a plan B very quickly," she warned.

Thousands of businesses around the world will be hoping that Plan B includes a bolder and clearer commitment on carbon pricing. 

This article is part of BusinessGreen's Road to Paris hub, hosted in association with PwC

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