Leaders Of The IMF World Bank And Germany's Angela Merkel Call For Price On Carbon

Sydney Morning Herald - Peter Hannam

AGL Energy's brown coal fired power station in Victoria is one of the nation's biggest emitters of carbon dioxide. Photo: Bloomberg

Global leaders including German Chancellor Angela Merkel and the heads of the International Monetary Fund and World Bank have called on countries and companies to put a price on carbon to speed up efforts to fight climate change.
In what has been described as an unprecedented alliance ahead of the Paris climate summit starting next month, the leaders said pricing emissions was needed to steer the global economy to a low-carbon future that would avoid dangerous levels of global warming.
"There has never been a global movement to put a price on carbon at this level and with this degree of unison," World Bank Group president Jim Yong Kim said in a statement. "The science is clear, the economics compelling and we now see political leadership emerging to take green investment to scale at a speed commensurate with the climate challenge."
The Carbon Pricing Leadership Coalition, which includes the giant California Public Employees Retirement System, CalPERS, plans to step up efforts at the Paris summit to get more regions to start pricing carbon. Some 40 nations and 23 cities, states and regions have fixed or floating carbon prices, covering about 12 per cent of global greenhouse gas emissions, the group said.
"The market needs a transparent and consistent price that discourages carbon emissions and stimulates low carbon investment opportunities," said Anne Stausboll, chief executive of CalPERS. The group manages some $US295 billion ($405 billion) in assets and said this month that it would consider divesting its holdings in thermal coal companies.
Australian Prime Minister Malcolm Turnbull was previously a strong advocate of a carbon price but promised not to revisit the policy when he deposed Tony Abbott last month. The Abbott government scrapped the Gillard-Rudd carbon tax in July 2014, replacing it with a reverse auction fund aimed at rewarding efforts by polluters rather than charging them to cut back.
"We are achieving real and significant abatement at around 1 per cent of the cost of the carbon tax," a spokeswoman for Environment Minister Greg Hunt said. "What counts is the total amount of emissions reduced and we are playing our part in reducing global emissions without increasing electricity bills for Australian families.
"The World Bank has recently launched a $100 million reverse auction that largely replicates many features of the Emissions Reduction Fund."
The first auction of Australia's $2.5 billion Emissions Reduction Fund contracted 47 million tonnes of carbon abatement at a cost of $14 a tonne, compared with the $24.15 a tonne carbon tax when that scheme was axed.
John Connor, chief executive of The Climate Institute, said the move by the World Bank, IMF and other leaders left no doubt that "pollution reduction through pricing mechanisms is a core climate policy tool and is one which Australia will need to return to".
"Some in government would have us believe the World Bank is adopting the taxpayer-funded Emissions Reduction Fund as an ideal model," Mr Connor said. "However, this move highlights the growing global engagement with carbon pricing that makes the polluter, not the taxpayer, the primary focus in modernising and decarbonising economies."
Germany's Dr Merkel said carbon pricing was important to drive investment into renewable energy and other "climate friendly technologies".
"We should advance our effort along this path further so that we can actually reach our goal of maintaining the two-degree upper limit," Dr Merkel said, referring to the temperature increase compared with pre-industrial times that is expected to lead to dangerous climate shifts.