Mexico advances on carbon pricing scheme
Mexico City, March 5, 2014: Some 30 countries -- representing about 80% of global greenhouse gas emissions -- met this week in Mexico to discuss domestic approaches to greenhouse gas mitigation, including initiatives that put a price on carbon such as domestic emissions trading schemes and carbon taxes.
The World Bank’s Partnership for Market Readiness (PMR) -- which brings together developing and developed nations -- is an important platform for countries to share information on their respective low emissions development actions. It supports a larger climate strategy to put a price on carbon.
Hosted by the government of Mexico, the PMR held its 8th Partnership Assembly meeting this week followed by a high-level conference today on domestic action and carbon pricing instruments where PMR participants including Mexico, China, South Africa, Brazil, the United States, and the European Commission presented their domestic strategies on climate action.
Mexico and South Africa discussed the establishment of a carbon tax in their respective countries. In January of this year, Mexico introduced a carbon tax on fossil fuels based on a fuel’s carbon content to encourage a shift to cleaner energy sources. The law foresees using offsets to pay for the tax, thus promoting the growth of mitigation projects in Mexico and the creation of a domestic carbon market. Mexico also mentioned that it will develop a cap-and-trade scheme for the energy sector, as part of its energy reform.
“In Mexico, carbon markets form part of a comprehensive policy towards climate change mitigation, which includes a number of instruments such as a carbon tax, cap-and-trade and national carbon registries. In fact, I see our carbon tax as the start engine for a Mexican carbon market”, said Rodolfo Lacy, Deputy Secretary of Planning and Environmental Policy of SEMARNAT, Mexico. “We urge fellow countries to step up their effort to combat climate change and embrace mitigation initiatives suitable for their national circumstances.”
China updated on the progress of its seven emissions trading schemes which are being piloted in cities and provinces covering 250 million people and one-third of China’s economy. Mr. Wang Shu of the National Development and Reform Commission also spoke about the national emissions trading scheme which China is hoping to put in place before 2020, with a single price on carbon.
Brazil discussed domestic mitigation actions to be implemented by 2020, such as targeted emission reductions of 36-39% (compared with projected emissions) in sectors including heavy industry, agriculture and forestry. Mr. Adriano Santhiago, Director of Climate Change at the Ministry of Environment, presented results to date, including a 79% reduction in deforestation in 2013 compared to 2004.
During the Partnership Assembly earlier in the week, PMR countries showed concrete steps forward. Thailand presented its final Market Readiness Proposal which outlines an energy efficiency trading scheme that could set the country up for a domestic emissions trading scheme one day. The assembly allocated $3 million to implement this plan of action.
"This meeting clearly shows that countries are ready to advance on climate action on the ground and willing to share experiences – successful or challenging - with each other. Eighteen countries, supported by the PMR, are now developing concrete plans that put a price on carbon,” said Ede Ijjasz-Vasquez, Director for Sustainable Development in Latin America and the Caribbean at the World Bank.
Also on Monday, the governments of Morocco and Colombia presented their draft Market Readiness Proposals. Morocco is considering the implementation of large-scale sectoral crediting mechanisms in electricity generation, cement production, and phosphates processing and will focus on building systems for data management and Monitoring, Reporting and Verification (MRV) in each sector.
Colombia is focusing on low carbon development in the urban transport sector which includes, among other things, a domestic offset scheme to support projects financed by a fuel carbon levy and the introduction of a vehicle emissions performance standard.
Two new countries, Tunisia and Kazakhstan, joined the PMR. Tunisia will use PMR support to design and test scaled-up emission reductions crediting mechanisms in the cement and energy sectors, and Kazakhstan is seeking technical support for the implementation of its national emissions trading scheme.
Established in 2011 by the World Bank, the Partnership for Market Readiness (PMR) is a grant-based, global partnership that provides systemic support and funding for technical and institutional capacity development and piloting of new and innovative market-based instruments in order to scale up climate change mitigation efforts.
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