Investors call for EU's carbon price to treble

8th July 2021


Web co2 shutterstock 96727612

Related Topics

Related tags

  • EU ,
  • Finance ,
  • Investment ,
  • Policy

Author

IEMA

A coalition of investors representing over $6.6trn (£4.8trn) in assets have called for the EU's carbon price to treble by the end of this decade.

In a new report, the UN-convened Net-Zero Asset Owner Alliance recommends that today's global carbon-pricing landscape be transformed in a matter of years to pave the way for 1.5ºC-aligned emissions regulation.

The group call for a carbon 'price corridor', where the price floor and ceiling rise over time, with a central median estimate of $147 per tonne required by 2030, up from the current €50 per tonne.

This will provide investors with greater certainty of future prices for efficient capital allocation, and reliable incentives for stakeholders to adopt or develop zero-emission technology, according to the report.

At present, around 80% of global carbon emissions are not covered by carbon-pricing mechanisms like emission-trading schemes or taxes.

The paper also proposes principles that will see all countries and regions set clear, legally binding net-zero targets, supported by regulated carbon-pricing measures, detailed implementation plans, and interim emissions reduction milestones.

Günther Thallinger, management board member at Allianz SE and chair of the Net-Zero Asset Owner Alliance said: “The principles we lay out in the discussion paper seek to accelerate policy and regulatory improvements towards a just transition.

“Non-regressive and revenue-neutral carbon-pricing instruments – harmonised across borders – will not only unleash massive investment in renewable power systems globally, but boost sectors from construction to transport, which are in urgent need of transition.

“While we recognise that carbon pricing is not a universal solution, governments that apply these principles will significantly increase their ability to deliver access to clean, affordable and reliable energy for all citizens.”

The carbon-pricing mechanisms proposed are a hybrid scheme between emissions trading or cap-and-trade schemes, and carbon taxes or levies.

A minimum market price – the floor – could provide certainty to investors and a guardrail against price crashes, while a maximum price – the ceiling – would prevent rapid increases in prices, and a backlash that could undermine political support for carbon-pricing more broadly.

The report also calls for a lower carbon budget – the cumulative amount of emissions permitted over a period of time – than currently exists, to meet the requirements of a 1.5ºC world.

Furthermore, it strongly encourages governments to accelerate R&D funding into zero-carbon and carbon-removal technologies, in addition to policies that drive the development and deployment these solutions at industry scale.

Charles Emond, CEO of Caisse de dépôt et placement du Québec (CDPQ), commented: “A carbon price corridor giving a clear economic signal, as well as more pre-visibility, will provide the global environment necessary for companies to make sound investments decisions, and for investors to support them in the decarbonisation of the real economy.”

Image credit: Shutterstock


Transform articles

Power struggle: Central government and local authorities

Devolving power from central government to local authorities will be critical for the UK as it looks to deliver on its environmental targets. Chris Seekings reports

23rd September 2021

Read more

The UK government has been “too city-focused” in its climate action and must provide more funding and support to reduce emissions in rural areas, the County Councils Network (CCN) has said.

22nd September 2021

Read more

COVID-19 offers the world a huge chance to beat a path to sustainability, says Oxford University professor Ian Goldin – but we must learn from past crises, he tells Huw Morris

30th July 2021

Read more

The UK’s pipeline for renewable energy projects could mitigate 90% of job losses caused by COVID-19 and help deliver the government’s ‘levelling up’ agenda. That is according to a recent report from consultancy EY-Parthenon, which outlines how the UK’s £108bn “visible pipeline” of investible renewable energy projects could create 625,000 jobs.

30th July 2021

Read more

The UK's largest defined benefit (DB) pension schemes have received a letter from the Make My Money Matter campaign urging them to set net-zero emission targets ahead of the COP26 climate summit later this year.

26th July 2021

Read more

The total cost of waste crime in England has increased by 53% in just three years, and now costs the country nearly £1bn annually, a recent study has uncovered.

23rd July 2021

Read more

The oil and gas industry is set to burn through its allocated carbon budget 13 years early unless decisive action is taken immediately, new analysis has found.

22nd July 2021

Read more

Public money spent rescuing economies from the impact of COVID-19 is set to do more harm than good to the environment, new research suggests.

16th July 2021

Read more

The sale of new diesel and petrol heavy goods vehicles (HGVs) will be banned in the UK by 2040 under proposals unveiled in the government's transport decarbonisation plan yesterday.

15th July 2021

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert