Hon. Stéphane Dion

Your member of parliament for


Saint-Laurent

Hon. Stéphane Dion

Your member of parliament for


Saint-Laurent

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“Global Carbon Pricing as a Tool to Enhance National Climate Laws”

Dears Readers,

From June 14th to June 18th, I was in Rio de Janeiro, Brazil, invited by GLOBE International to be part of their legislative delegation at the World Summit of Legislators, and was asked to speak at their Parallel Session on Climate Change.

Please find below the presentation I delivered. This presentation is a shorter version of a more elaborate paper I published with Professor Éloi Laurent (http://www.ofce.sciences-po.fr/pdf/dtravail/WP2012-16.pdf).

In our paper, we make the point that given the seriousness of the climate change crisis and the fact that the current negotiations are stalled, we need to try something else; we suggest a harmonized carbon price would be the most effective instrument to fight global warming.

I would be very interested to hear your views.

Enjoy your read!

Stéphane Dion

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“Global Carbon Pricing as a Tool to Enhance National Climate Laws”

The Honourable Stéphane Dion, Privy Council, Member of Parliament,
Former Minister of the Environment of Canada and
UNFCCC COP-11 President

Introductory Remarks to GLOBE International’s World Summit of Legislators, Parallel Session on Climate Change and Disaster Risk Reduction
Palacio Tiradentes, Rio de Janeiro, Brazil, June 17, 2012

For years, the Global Legislators Organization (GLOBE international) has been giving legislators of the world the opportunity to learn from one another and together, identify and promote the best governance practices and solutions. While we come from different continents, national contexts and levels of development, we are all legislators. And as such, we share a huge responsibility: to develop and implement fair and effective ways to replace the self-destructing development model that prevails today with one of true sustainable development, to the benefit of all countries, today and for the generations to come.

This world summit makes no exception. It is indeed a tremendous opportunity to learn from one another, just before Rio + 20, the United Nations Conference on Sustainable Development. It is also an opportunity to recognize the impressive efforts our respective countries, local communities and businesses are already making in the pursuit of sustainable development, and to acknowledge the tangible results already achieved, including those in the fields covered in this session: climate change and disaster risk reduction. There is a positive momentum which, by creating better political conditions for improving the climate of international negotiations, will benefit not only our respective countries, but the whole world.

That said, it is hard to see how these efforts, laudable though they are, could create the impetus needed to elicit an effective response to the genuine and grave dangers of climate change, in the absence of a robust global climate agreement.

Climate is a global public good: one tonne of carbon dioxide emitted in Montreal has exactly the same effect on global warming as does one tonne of carbon dioxide emitted in Rio. So we must avoid having decreased emissions by some countries (or regions and cities) cancelled out by increased emissions in other countries (or localities). For this, we need a truly global agreement. Governments and businesses are very unlikely to step up their greening efforts sufficiently if they have no assurance that their competitors will play by the same climate rules. Only an international agreement can give them that assurance. And we, national legislators, will continue finding it very hard to enact truly effective climate laws and regulations in our respective countries as long as the critical climate change mitigation initiatives are not part of a coordinated, harmonized international plan.

But we have a real problem: climate international negotiations are not progressing as they should. In fact, one may argue that they are stalled. They have failed to deliver the solid political commitments required to meet the science-based global warming maximum limit to which the negotiators have agreed.

This scientific global bottom line is well known: the consensus among climate scientists is that it would be imprudent to allow global warming to exceed 2º C above pre-industrial levels. Beyond this tipping point, climate science warns that our planet will become much less hospitable for virtually all forms of life, including humans. The IPCC 2007 report stated that even 2º C above pre-industrial levels is likely to have serious impacts.

At the 2011 Cancún Conference, countries officially accepted this 2º C limit. But countries are far from reaching this target with their current commitments. Available studies concur that all voluntary commitments made by countries since the 2007 Bali Conference, taken together, point to a temperature rise of at least 3º C during the 21st century. The International Energy Agency forecasts a warming of over 3.5º C by the end of the 21st century if all countries respect their commitments, and over 6º C if they do not respect their commitments and stick to their current policies.

At the 2011 Durban Conference, the countries admitted to this gap between their commitments and achieving the 2º C objective. And they went even further in the preamble of their joint statement, expressing their “grave concern” and promising to “raise the level of ambition” to bridge this gap.

But since then, countries have not set more stringent objectives for themselves. Nor does the Durban common statement set out any target date by which emission reductions must begin, or any global emission reduction objectives for 2020 or 2050.
We are thus facing an increasingly untenable discrepancy between the urgency of taking action, as established by science, and the inertia of international negotiations.

So what can we legislators do to fix this climate inconsistency? My suggestion: call on our governments to fine-tune international climate negotiations, towards the establishment of a much-needed universal, harmonized carbon price.

For years, many experts and analysts – such as well-known climate economists William Nordhaus (YaleUniversity) and Nick Stern (LSE), as well as climate scientist Jim Hansen and his co-authors – have called for the adoption of a universal carbon price. The OECD recommends “Acting now to put a price on carbon”. There is currently strong scientific evidence that the best international co-ordination instrument we can establish to combat climate change is a global, harmonized carbon price. A recent study, co-authored by professor Éloi Laurent, the Stanford University and Sciences Po economist, and yours truly, (http://www.ofce.sciences-po.fr/pdf/dtravail/WP2012-16.pdf and http://www.ofce.sciences-po.fr/pdf/dtravail/WP2012-15.pdf) suggested that upcoming climate negotiations should focus on this essential instrument.

Here is what we proposed in this study: that all countries commit to introduce, in their respective jurisdictions, a carbon price aligned with a scientifically-validated international standard, in order for the world to keep global warming below 2º C over pre-industrial era levels, or at least to get as close as possible to this objective.
The fourth Intergovernmental Panel on Climate Change (IPCC) report calls for a carbon price of between $50 and $100 per tonne between 2010 and 2030. Countries may levy this price through a carbon tax or through the allocation of emission quotas (i.e. cap and trade, carbon market).

Governments would be free to invest, as they see fit, revenues from the carbon emission levy and from the corresponding – and necessary – elimination of fossil energy subsidies. For example, they could invest in research and development in clean energy, public transportation, etc. They could also choose to address social inequalities with respect to access to energy.

Not every country has the same capacity to deal with a carbon price. This is why, rather than a single fixed price, negotiations should focus on a price bracket and a clear price signal trajectory.

This calls for international compensation mechanisms. In the name of the “Common But Differentiated Responsibility” principle, developed countries would be required to set aside part of their revenue to help developing countries introduce policies to lower their emissions, adapt to climate change impacts and create carbon sinks (through reforestation, for example). This requirement would help fund the yet unsourced $100 billion annual injection into the Green Climate Fund, which developed countries agreed to provide beginning in 2020. This amount could even be increased.

We propose that the contributions of individual developed countries be set according to the proportion of total developed country emissions that their respective GHG emissions represent. The lower a country’s emission level, the lower its share of the financial effort: that is sure to be another incentive for further emission reductions.

This would provide the world with an excellent instrument for sustainable development. At long last, carbon emitters would have to pay the environmental cost of pollution. Consumers and manufacturers would have an incentive to choose lower-carbon-content goods and services and to invest in new energy-saving and emission-reducing technologies. And governments and legislators would have the tool to achieve the scientific target they have rightly endorsed.

We must negotiate this harmonized carbon price signal, and we must do it now. What better place to get this approach going than here in Rio, right where the problem of climate change was recognized by the international community 20 years ago?