The main objectives are:
- The key objective is to get a large volume of visible support for carbon pricing.
- To encourage governments to introduce effective carbon pricing instruments consistent with their net zero targets set in the Paris Agreement and align these with other countries where appropriate, create a stable and predictable investment environment and finalise the rules for international market mechanism under Article 6 of the Paris Agreement.
Climate change is accelerating.
- Today, the world has reached 1.2 degrees of warming and already witnessed unprecedented weather extremes in every region and on every continent. We are heading for a catastrophic temperature rise of 3 to 5 degrees Celsius this century. The year 2020 was one of the three warmest on record, rivalling 2016 for the top spot (1).
- Average carbon dioxide levels exceeded 410 parts per million in 2019 and the rise continued in 2020 despite COVID-19 lockdowns. Since 1990, there has been a 45% increase in total radiative forcing – the warming effect on the climate – by long-lived greenhouse gases, with CO2 accounting for four-fifths of this (2).
Mitigation actions are lagging behind.
- Countries representing about 65% of global CO2 emissions, and about 70% of the world’s economy, have set climate neutrality targets (3), but the level of investment in clean solutions is still too low.
- It is estimated that the level of ambition needs to be roughly tripled to align with the 2°C limit and must be increased around fivefold to align with the 1.5°C limit (4).
Only a fraction of green-house gas emissions has an effective carbon price.
- About 22% of global greenhouse gas emissions are covered by carbon pricing initiatives, and less than 5% of GHG emissions are within the recommended range. About half of the covered emissions are priced at less than USD 10/tCO2e, and the global average carbon price is USD 2/tCO2 (5).
- Last year, governments raised about USD 45 billion in revenues from carbon pricing(5), while direct fossil subsidies amounted to USD 478 billion (6).
- The indirect costs of fossil fuel combustion and the impacts of climate change are about USD 5 trillion per year (7).
- In the last five years, the coverage of carbon pricing has increased by less than two percentage points per annum (5 & 8).
- The above facts show that we currently ‘penalise’ GHG emissions by one monetary unit compared with providing ten units of support for fossil fuels, while no attention is paid to costs that are a hundred times higher.
- If we do not have a step change, we will not get the investments from the private sector that are required to combat climate change on time.
- We need to finalize the Article 6 of the Paris Agreement and have transparent and robust rules for international market mechanism to support cost-effective mitigation efforts, to create a level playing field and minimize carbon leakage, while enabling greater ambition.
- WMO, 2020 was one of three warmest years on record
- WMO, Carbon dioxide levels continue at record levels, despite COVID-19 lockdown
- UN, Climate Ambition summit release
- WMO, Landmark United in Science report informs Climate Action Summit
- World Bank, State and Trends of Carbon Pricing 2020
- OECD, Governments should use Covid-19 recovery efforts as an opportunity to phase out support for fossil fuels say OECD and IEA
- IMF, Global Fossil Fuel Subsidies Remain Large: an Update based on Country-Level Estimates
- World Bank, State and Trends of Carbon Pricing, 2016