The Carbon Pricing Leadership Coalition (CPLC) has identified Carbon Pricing as an important tool that can drive sustainable development and reduce carbon pollution.
The phrase “put a price on carbon” is gradually becoming increasingly common in corporate and government conversation as discussions of how to address climate change move from concern to action.
The World Bank Group, business groups, and investors have called on governments and corporations around the world to support carbon pricing to bring down emissions and drive cleaner investments in cleaner technologies.
Players in the industry say cooperating domestically, regionally, and internationally can facilitate greater ambition and efficiency of carbon pricing initiatives.
Plus communication and stakeholder engagement are key to ensuring carbon pricing initiatives are equitable and aligned with larger development goals.
At the just ended Africa Climate Week held in Accra, Ghana, key stakeholders from across the continent met and discussed how to design a price on carbon to fulfil both of these goals.
The event showcased how policies and programs to put a price on carbon can mobilize climate investment, drive social benefit, and reduce carbon pollution.
The agenda featured key stakeholders who are either implementing, considering, or advancing carbon pricing.
Representatives from Burkina Faso, Côte d'Ivoire, South Africa, Rwanda, Senegal, Ghana and Nigeria led the over 250 participants that discussed the issue.
Key takeaways included that there is a compelling case to price carbon to drive sustainable development in Africa.
The group observed that the momentum for carbon pricing is building in Africa, but more needs to be done to expand coverage of initiatives across the continent.
These takeaways and the outcomes will provide the foundation for Carbon Pricing Leadership Coalition (CPLC’s) future activities.
This includes enhancing awareness of the important role carbon pricing can play in African countries, engaging youth and other stakeholders in the region, and increasing country-specific knowledge creation.
Asmau Jibril of the Federal Ministry of Environment of Nigeria articulated the importance of the session and together with other panellists discussed the role carbon pricing could play in achieving sustainable development objectives.
“Africa has come together to join the rest of the world in tackling the issues of climate change as we have just one world and we have to protect it now”.
The importance of designing carbon pricing initiatives in the context of local conditions to ensure predictability for future investments was highlighted.
The group also referenced benefits that accrue from the incentives carbon pricing policies and measures create including technology development, revenue generation that can be channelled towards additional priorities, and job creation.
The role of the Private Sector
Regarding the private sector, the discussion highlighted how African businesses operate in a globalized world with global supply chains.
The representatives mentioned how in South Africa the number of companies disclosing the use or future use of an internal carbon price is increasing.
Applying a price on carbon can help increase transparency and allows companies to make long term decisions regarding their investments and operations.
In the face of these, concerns regarding competitiveness, especially on energy-intensive economies, need to be addressed to increase the responsiveness among businesses.
The group added that as companies begin linking their finances closer to their carbon footprint, climate action will accelerate.
They underscored the need to have a clearly defined climate strategy with an overarching vision and purpose to define carbon prices that would be responsive, equitable and relevant.
This will also ensure a just-transition for people whose livelihood depends on fossil-fuel intensive industries.
Ongoing carbon pricing initiatives
Other representatives from the West African Alliance, UNFCCC, Perspectives Climate Group, UNEP, and the World Bank Group looked at ongoing carbon pricing initiatives in Africa, including those that build on past experiences with carbon markets and new pilot opportunities.
A common theme across the ongoing initiatives was the importance of aligning carbon pricing initiatives with other domestic policies to avoid inefficiencies and unintended impacts and ensure coherence with sustainable development objectives.
Dr Venkata Ramana Putti of World Bank Group called for enhanced engagement with governments, private sector representatives, and civil society organizations.
She also emphasized how institutional partnerships, such as the West African Alliance on Carbon Markets and Climate Finance, can improve the likelihood of carbon pricing adoption.
“There is room to explore ways to roll out carbon pricing mechanisms in Africa which are not in conflict with poverty eradication gains. Mechanisms that are complimentary with national plans to deliver Sustainable Development Goals (SDGs) ensure that the chosen carbon pricing tools fit national circumstances.”
The discussions emphasized how the efficiency of carbon markets and their ability to increase climate ambition are worth fighting for setting the stage for Article 6 negotiations moving forward.
Way forward with CPLC
From the discussions, the representatives laid down some next steps to be taken to further the agenda;
Carbon Pricing Leadership Coalition (CPLC) partners, like the World Bank Group, will continue exploring ways to conduct country and regionally-specific carbon pricing research in Africa.
The CPLC aims to expand the Africa Working Group to bring in more stakeholders and foster important conversations on the role carbon pricing can play and the best practices for its implementation.
CPLC partners will continue to support capacity building in African countries to ensure proper readiness for the implementation of carbon pricing initiatives that are environmentally effective and aligned with sustainable development.
It is clear that momentum for a socially beneficial and environmentally effective price on carbon is building across Africa.
Why price on carbon?
A price on carbon helps shift the burden for the damage back to those who are responsible for it, and who can reduce it.
Instead of dictating who should reduce emissions where and how, a carbon price gives an economic signal and polluters decide for themselves whether to discontinue their polluting activity, reduce emissions, or continue polluting and pay for it.
In this way, the overall environmental goal is achieved in the most flexible and least-cost way to society. The carbon price also stimulates clean technology and market innovation, fueling new, low-carbon drivers of economic growth.
About the carbon pricing leadership coalition
The Carbon Pricing Leadership Coalition (CPLC) brings together leaders from across government, the private sector, and civil society with the goal of putting in place effective carbon pricing policies that maintain competitiveness encourage innovation and deliver meaningful emissions reductions.
The workshop and discussions were organised by the World Bank Group (WBG) and the International Emissions Trading Association (IETA).