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Global CO2 pricing seen unlikely to be big part of Paris climate deal
June 2, 2015 / 3:45 PM / 2 years ago

Global CO2 pricing seen unlikely to be big part of Paris climate deal

LONDON/BONN (Reuters) - A global carbon emissions pricing system pushed by top energy companies is unlikely to be a big part of any United Nations’ deal to curb global warming, some experts say, because many countries have little faith in such cross-border initiatives.

“All countries are relatively sceptical on international market mechanisms,” said Niklas Hoehne, founding partner of research group NewClimate Institute. “They are open to have national trading mechanisms or national pricing, but to have these mechanisms internationally, there is a lot of reluctance.”

On Monday, BG Group, BP, Eni, Royal Dutch Shell, Statoil and France’s Total urged governments to create a global market for carbon emissions, saying this would create a widely accepted price for carbon and help spur low-carbon investment.

A growing number of investors with trillions of dollars of assets, along with climate change experts and world leaders such as German Chancellor Angela Merkel support the plan.

But, wary of the sharp decline in EU carbon pricing, there is little agreement on specifics. Prices in the EU’s Emissions Trading System, the world’s biggest carbon market, have dropped from 30 euros a metric ton in 2008 to around 7 euros, due to an oversupply of carbon permits and reduced demand after the economic slowdown.

“Markets will have a role to play in lowering the cost of mitigation worldwide ... Exactly how that is going to function and under what rules and what circumstances remains to be decided,” U.N. climate chief Christiana Figueres said in an interview at a carbon industry event in Barcelona last week.

KEY APPROACH

The draft of the U.N. deal includes an option to acknowledge that “carbon pricing is a key approach for cost-effectiveness of the cuts in global greenhouse gas emissions,” but offers little detail on how it might work.

The U.N.’s final deal is unlikely to include strong calls for carbon pricing, said officials meeting in the German city of Bonn this week to prepare for the Paris conference.

Substantive measures to create an international system may be absent.

The Paris accord may do little more than call on governments to nationally implement carbon pricing systems and include a mandate to consider rules for international mechanisms, Hoehne said.

Around 40 countries already have a price on carbon emissions, covering around 12 percent of annual global greenhouse gas emissions, said the World Bank.

Some countries questioned the oil companies’ push for carbon pricing.

“They spread a lot of misinformation,” said Abdullahi Majeed, environment minister of the Maldives, the Indian Ocean island nation whose low topography makes it a potential victim of rising sea levels. “This might be an attempt to delay, rather than speed up, work on a Paris accord.”

Additional reporting by Susanna Twidale; Editing by David Holmes and Katharine Houreld

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