A group of world-leading climate scientists has today warned that carbon pricing is currently too low to deliver a just transition to a net-zero economy, and that "urgent reforms" are needed.
In a new report, the Climate Crisis Advisory Group (CCAG) sets out seven recommendations that global leaders must consider at COP26 to make carbon pricing more effective.
These include setting a higher carbon price, greater sectoral and geographical coverage, and for carbon price revenues to be openly and equitably redistributed to avoid hardship for vulnerable and low-income households.
The paper also calls for carbon pricing to cover all sources of greenhouse gas emissions, and for increased financing from high-income countries to low-income nations to enable strong fiscal and regulatory policies.
Furthermore, the scientists argue that governments must be prepared for “institutional changes” in policymaking to include systems thinking, learning and adaptation and knowledge-sharing across countries.
They explain how global greenhouse gases are currently on track to be 16% above 2010 levels by 2030, far exceeding the 45% reduction on 2010 levels needed to hold warming to less than 1.5°C.
Sir David King, chair of the CCAG, said: “A properly functioning carbon price covering a large number of countries would send clear signals across global supply chains and help address the distributional impacts of the energy transition.
“Without significant international fiscal policy revisions such as this, we will categorically lose our fight against climate change, where climate-related disasters become our only certainty.”
Rules on the operation of carbon markets set out in Article 6 of the Paris Agreement are scheduled to be agreed at COP26 in November, with significant implications for the current and future price of carbon.
The CCAG also proposes an alternative approach to carbon pricing which levies charges at the point of fossil fuel extraction, based on the amount of CO2 formed in any process in which it would be used as fuel.
This could provide a price that is more easily comparable across borders, more inclusive of the range of end-uses for fossil fuels, and forge a link between the price of extraction and price of usage.
Speaking to Transform magazine last month, King said: “There is a much smarter way to do this, which is to deal with the mining of coal, oil and gas and to place a carbon price on that. Companies would then face a heavy carbon price on mining, which should be a progressively-increasing price.
He added: “Unless we make the transitions necessary, we are going to lose what we understand by our civilisation over the coming decades.”
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