World business leaders want the upcoming United Nations climate summit to address difficulties that have hampered the use of carbon pricing to reduce global emissions, with the goal of enhancing the role of businesses in slowing global warming.
After negotiators at the 2019 meeting in Madrid failed to agree on how countries may account for international carbon trading, as required by Article 6 of the Paris climate agreement, executives, trade groups, and policy experts say hopes for a deal are building.
The absence of an international agreement has stymied the establishment of carbon pricing regimes.
According to Rich Lesser, worldwide head of Boston Consulting Group, having a mechanism to evaluate the economic cost of emissions is a top objective for firms across many industries whose leaders want to reduce greenhouse gas emissions.
For executives, “if you had a global price on carbon, then it would be economically rational to pursue solutions and alternatives”, Lesser said.
The final resolution of Article 6 to handle technical issues such as how countries may monitor and verify carbon emissions is “far overdue,” according to Dan Byers, who will represent the US Chamber of Commerce at the conference in Glasgow.
He went on to say that one aspect supporting a settlement is US President Joe Biden’s attention on climate after his predecessor Donald Trump backed out of the 2015 Paris climate agreement.
“Having the Biden administration backing Paris, and at the table, is hugely important over the long run,” Byers said.
Other topics on which corporate executives will focus during the summit, which begins on October 31, include whether national leaders will make fresh pledges to reduce emissions and how much money will be set aside to finance sustainable development in emerging economies.
Carbon pricing systems might include carbon taxes, which charge firms for emissions, or emissions trading markets, which set a limit on how much companies or governments can emit but allow them to sell permits to exceed that limit.
Many corporations expect carbon pricing plans will help them fulfill the now widespread “Net Zero” pledges, said Kelley Kizzier, a vice-president at the Environmental Defense Fund, a Washington advocacy group, and a onetime co-chair of the negotiating group over Article 6 at previous climate summits.
She stated that among the challenges to be resolved in Glasgow for Article 6 are how to prevent two countries from counting the same emissions reduction and how new carbon markets may assist pay developing countries’ climate change adaptation efforts. Even if a deal is achieved, she added, corporations will still be responsible for reducing their emissions.
“It’s not rainbows and butterflies just because a goal is set,” Kizzier remarked.
Apart from carbon pricing, world leaders are divided on other issues that will be discussed in Glasgow, including the future role of fossil fuels in the global economy.
However, energy executives believe that fossil fuels will continue to play a part in the energy transition. According to Aaron Padilla, a policy director for the American Petroleum Institute, which includes huge energy corporations including ExxonMobil Corp, Royal Dutch Shell, and Norway’s Equinor, new natural gas facilities in emerging countries would emit fewer emissions than existing coal-fired power.
“There’s still significant room for natural gas especially to displace coal as a source of production,” Padilla said.
Financial institutions are under their own set of pressures. The Glasgow Financial Alliance for Net Zero, a group of companies with a combined $90 trillion in assets, has urged governments to adopt wide net-zero targets and tax carbon, among other things. find out more
However, the alliance includes banks that continue to support fossil-fuel projects, prompting criticism that they, as well as the alliance’s chair, U.N. special envoy Mark Carney, are squandering an opportunity to compel tougher action. Richard Brooks, climate finance director for the activist group Stand.earth, believes that other banks should follow France’s Banque Postale’s lead and quit serving the oil and gas industries entirely by 2030.
“Many of the banks who are part of the alliance are getting kudos and green cover but not changing their day-to-day financial practices,” Brooks said.
(Adapted from Reuters.com)