Heads of State, City, Regional and Business Leaders Unite to Call for Price on Carbon

October 19, 2015


For the first time Heads of State, city and provincial leaders have come together with the support of leading companies to urge countries and companies around the world to put a price on carbon pollution.

  • Carbon pricing is a key building block to tackle climate change and drive investment in a low carbon future.
  • Launched today, the Carbon Pricing Panel is an unprecedented alliance of Global Leaders united to put a price on carbon pollution.
  • The number of implemented or scheduled carbon pricing instruments has nearly doubled since 2012, reaching an aggregate market value of about $50 billion.

What can be done to reduce greenhouse gas emissions, protect our environment, and help support people most vulnerable to climate change?

The answer is simple: A key element for any strategy to tackle climate change must be to put a price on carbon pollution. The transition to a cleaner future requires government action and the right incentives. Carbon pricing is a key building block to help cut pollution and drive investment in a low carbon future.

It’s a point recognized by leaders from Europe, across to Africa and Asia, who have today – for the first time - come together with the support of leading private companies to urge countries and businesses around the world to put a price on carbon. 

Convened by World Bank Group President Jim Yong Kim and the International Monetary Fund’s Managing Director Christine Lagarde, the high-level Carbon Pricing Panel is calling on their peers to follow their lead and put a price on carbon. They are joined in this effort by OECD Secretary General Angel Gurria.

The call by the leaders comes on the first day of the last round of negotiations ahead of the Paris climate talks in December. The leaders aim to seize the momentum generated by the Paris talks to spur further, faster action towards carbon pricing, as a necessary path to a low carbon, productive, competitive economy of the future.

Members of the Carbon Pricing Panel include German Chancellor Angela Merkel, Chilean President Michelle Bachelet, French President François Hollande, Ethiopian Prime Minister Hailemariam Desalegn, Philippines President Benigno Aquino III, Mexican President Enrique Peña Nieto, Governor Jerry Brown of California, and Mayor Eduardo Paes of Rio de Janeiro.

Private sector support is spearheaded by Anne Stausboll, CEO of US Institutional Investor CalPERS, Gérard Mestrallet, CEO of ENGIE of France, Anand Mahindra, Chairman and Managing Director of Mahindra Group of India, and Feike Sijbesma, Chairman and CEO of Netherlands-based Royal DSM.  

" There has never been a global movement to put a price on carbon at this level and with this degree of unison. It marks a turning point from the debate on the economic systems needed for low carbon growth to the implementation of policies and pricing mechanisms to deliver jobs, clean growth and prosperity. The science is clear, the economics compelling and we now see political leadership emerging to take green investment to scale at a speed commensurate with the climate challenge. "

Jim Yong Kim

World Bank Group President


Summary map of existing, emerging and potential regional, national and sub-national carbon pricing instruments (ETS and tax)

Around the world, about 40 nations and 23 cities, states and regions have implemented or are putting a price on carbon with programs and mechanisms covering about 12 percent of global greenhouse gas emissions.

The number of implemented or scheduled carbon pricing instruments has nearly doubled since 2012, reaching an aggregate market value of about $50 billion

And already more than 400 businesses around the world are using a voluntary, internal price on carbon as part of their investment strategies, with prices ranging from US$4 to over US$100 per ton of CO2. This is a tripling in the number of companies compared with last year reporting that they price their emissions.

Carbon pricing delivers a triple dividend.

Firstly, it is good for the environment and it reduces emissions - lowering social costs of health impacts on people, as well as tackling the global warming.  A price on carbon can help alleviate health and environmental problems like premature deaths from exposure to outdoor air pollution. According to the World health Organization, an estimated 3.7 million people die prematurely from outdoor air pollution.

Secondly, carbon pricing is an essential part of getting prices right for the move to a low carbon more resilient growth. It raises revenue efficiently, making it possible to reduce more distortionary taxes, and it allows for targeted support for clean energy solutions rather than harmful subsidies that do little for poor people or the environment.

And thirdly, it drives innovation and critically needed investments in low-carbon solutions, boosting private sector investment in clean tech research and development, and offering the prospect of job creation in the sectors of the future.

Why is is it important to act now on carbon pricing? Because strong public policy gives the private sector the certainty and predictability to make the necessary long-term investments in climate-smart development and prevent catastrophic impacts from climate change. Carbon pricing is the cornerstone of a package of policy measures designed to achieve emission reductions at lowest cost.

Today, countries and regions are learning from one another and creating a set of successful approaches to pricing carbon. Some early lessons are described in the World Bank Group publication The FASTER Principles for Successful Carbon Pricing – which lays out principles for effective, efficient and fair pricing of carbon.   

Some examples include:

  • The Canadian province of British Columbia was an early mover on carbon pricing, with the creation of a carbon tax in 2008, with the tax used to cut income taxes and fund tax credits. Also, British Columbia is home to a growing clean technology sector, with more than 150 firms in 2013, accounting for 22% of Canada’s clean tech presence in a province with only 12% of Canada’s GDP. Several experts attribute this growth to the carbon tax.
  • California, Quebec and the European Union allocate a portion of their emissions trading scheme (ETS) auction revenues to designated green technology funds and innovation, to support sectors affected directly or indirectly by higher carbon costs.
  • In Chile, the government has passed legislation on a carbon tax – effective as of 2017 - as part of a much larger tax reform package with the explicit aim of providing additional resources for education and other social protection programs.
  • In Northeastern United States, the Regional Greenhouse Gas Initiative is expected to save people money on energy bills. The RGGI states have invested over $1 billion from ETS proceeds in energy-efficiency program, which are expected to return more than $2.3 billion in lifetime energy bills savings to 1.2 million participating households. Also, from 2008-2012, RGGI invested more than $130 million to help energy and electricity customers in need.

The high level panel provides political momentum to complement the voices of government and industry leaders in the Carbon Pricing Leadership Coalition (CPLC), a working coalition that is being formed on the back of support for carbon pricing from 74 countries and 1,000 companies, at the 20014 UN summit on climate change.

Putting a price on carbon can be done in many ways: using an emissions trading system (ETS), like the one in Europe, or introducing carbon taxes and fees, like in Sweden and Norway. Most importantly, the “polluter pays” principle applies – those who are responsible for the pollution face the cost of it.