Hon. Stéphane Dion

Your member of parliament for


Saint-Laurent

Hon. Stéphane Dion

Your member of parliament for


Saint-Laurent

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“Towards a Science-Based Global Harmonized Carbon Price”

Dears Readers,

On June 15th, I was in Rio de Janeiro, Brazil, invited by the Intergovernmental Panel on Climate Change (IPCC) to speak at the United Nations Conference on Sustainable Development Rio + 20 Side Event entitled, ”Connecting the dots: science, the IPCC and the policy picture”.

Enjoy your read!

Stéphane Dion

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“Towards a Science-Based Global Harmonized Carbon Price”

The Honourable Stéphane Dion, P.C., Member of Parliament,
Former Minister of the Environment for Canada,
UNFCCC COP-11 President

Introductory Remarks delivered on a Panel Discussion at
the UNCSD Rio + 20 Side Event: “Connecting the dots: science, the IPCC and the policy picture”, in a Forum on Science, Technology & Innovation
for Sustainable Development

Rio de Janeiro, Brazil, June 15, 2012

In the global fight against climate change, the respective roles of climate scientists and policymakers have reversed since the 1997 adoption of the Kyoto Protocol.

Kyoto was concluded through a politics-precedes-science approach: after discussions and negotiations, governments announced their respective national GHG reduction targets, and then the scientists computed what the sum of these targets would mean for GHG reductions and climate change mitigation.

But over time, COP after COP, parties implicitly accepted to work through a science-informs-politics approach: a GHG reduction target is first established by climate scientists, and then national governments together figure out how to reach it.

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 2010 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 policymaker-driven international negotiations. These negotiations have failed to deliver the solid commitments required to meet the science-driven target that the negotiators themselves have agreed to. Let’s face it: climate negotiations are stalled.

So what can policymakers do to fix this climate inconsistency?

My suggestion: they must begin by listening seriously to what the scientists are saying.

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 now 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 that 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 (ie: 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 policymakers 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?