Climate action is taking the world by storm right now. On September 20th, youth-led climate strikes will occur in cities around the world, where people will demand that their leaders take action on climate change and that large polluters take accountability for the damage they have caused. The mass walk-out will be followed by a week of events for businesses, governments, individuals, institutions, and nonprofits, that display climate action and discuss how to do more moving forward at Climate Week NYC. Many are anticipating the emissions targets and pledges that will be unveiled at COP25 in December this year.
As more and more groups engage, business leaders have started to join the conversation on how market-based solutions can help transition to a low-carbon economy, spur innovation of clean technology and investments in green infrastructure, and incentivize lower emissions. Earlier this year, top business leaders from across the U.S., representing more than 2.8 million employees globally, lobbied Capitol Hill to put a price on carbon pollution, a sign that businesses are beginning to recognize the importance of reducing emissions efficiently.
Carbon pricing is being proposed and implemented around the world at the national , regional, and state level. The business community is a key part in ensuring the success of carbon markets, and companies are making their support of a carbon price clear.
So why is business engagement essential in reducing greenhouse gas emissions? How can different stakeholders, including advocates, business leaders, and policymakers work together to pass bold climate solutions? How can we elevate the businesses voices to become leaders in the conversation? Emissions trading experts Katie Sullivan from the International Emissions Trading Association (IETA) and Tom Erb from the World Bank’s Carbon Pricing Leadership Coalition (CPLC) join Climate XChange’s State Carbon Pricing Network and the Climate Action Business Association to answer these questions and dive into the nature and importance of business engagement in the global carbon pricing movement.
Emissions Trading Markets
Katie Sullivan is the Managing Director at IETA, the leading global business voice for the intersection of markets and climate change. IETA represents a wide variety of over 150 corporate members, including Bank of America, Shell, and the Climate Trust, and Katie leads global efforts to inform market-based climate solutions. This variety enables IETA “to make sure that, as these carbon pricing programs are designed, implemented, and hopefully linked and harmonized, they work for business and unlock the serious amount of capital innovation it will require to reach our global temperature goal.”
Although this can be a difficult, complex task, Sullivan highlights the progress we’ve made since the Kyoto Protocol. In 1997, only 37 countries pledged to cut their greenhouse gas emissions, while in Paris in 2015, 192 countries put forward their Nationally Determined Contributions (NDCs).
“If you look back to Kyoto, it was a different world,” Sullivan says, “… we now have a number of countries that have these targets, want to reach these targets, and also want to put a price on carbon and use market instruments to do so.”
Over 100 countries have set NDCs that will use markets, cooperative approaches and trading in order to reach their NDCs, or have access to markets and trading. In a new report, IETA and the University of Maryland found that, by 2030, there could be $250 billion in possible cost-savings by allowing international carbon markets and cooperation to materialize. As the costs of climate change increase, carbon markets can help to reduce this pricey burden.
Communication is Key
As jurisdictions around the world implement carbon pricing, Tom Erb stated, “we’re going to need to continue to push and keep that momentum going.”
Erb is the Partner Relations Coordinator for the Carbon Pricing Leadership Coalition at the World Bank, and manages a network of over 275 coalition partners to advance carbon pricing implementation around the world.
“We have momentum, but we’re not nearly where we need to be,” Erb said.
The CPLC focuses on three main areas to get ambitious carbon pricing policies enacted: stakeholder engagement, enhancing the knowledge base, and effectively communicating carbon pricing. In a world where many policymakers are “wondering if carbon pricing is even worth it because of the political challenges associated with it,” communication is key. Business leaders serve as a key voice in this conversation. The CPLC has released guidebooks to help both governments and businesses effectively communicate carbon pricing, which can be found here.
Businesses Set More Ambitious Prices on Emissions
The CPLC provides tools for how businesses can use internal carbon pricing for their own operations, and how businesses can best prepare for carbon pricing in their jurisdiction.
About 1,400 companies have disclosed they are using internal carbon pricing. Interestingly, Erb points out that “about half of those companies actually have a higher internal carbon price than the carbon price they have to meet in the jurisdiction where their headquarters is. Businesses are actually being more ambitious with their internal carbon pricing.”
Internal carbon pricing allows businesses to gain a competitive edge as we’re making the inevitable transition to a low-carbon future, and plan for future government policies.
Erb discussed how governments and businesses can create platforms to work together on climate policy. As Sullivan mentioned, carbon pricing must maintain environmental integrity, while also working well for businesses.
According to Sullivan, the first step for many businesses to reduce their carbon footprint is purchasing offsets. This allows for broader offset markets to be used as compliance methods down the line as carbon pricing policies develop.
Our guests advocated for more businesses to get involved and get engaged in the movement. They serve as a crucial voice in pushing forward climate solutions and can provide key insights into carbon markets around the world.
“The business voice can often be the trusted voice, even if they’re saying the exact same thing,” Erb added.
The Future of Business in Carbon Pricing
Carbon pricing is gaining momentum around the world, and businesses have proven to be an important voice encouraging governments to adopt market-based solutions. Compared to 46 national and 28 subnational jurisdictions, over 1,400 businesses have implemented carbon pricing internally. This number is expected to increase, growing the community of advocates calling for government action. In the coming months, they are going to play a key role in conversations at Climate Week NYC and at COP25.
As Sullivan points out, “it seems to be a no-brainer, but you have to keep emphasizing the business case.”
This webinar is part of the State Carbon Pricing Network’s Deep Dive Webinar Series. Each month, we explore a carbon pricing topic in depth, bringing in experts and pushing forward the conversation.