COP25: Agreement On A Carbon Market Pushed Back For Another Year
The much anticipated COP25 came to a close last Sunday with a lack of cohesive action. Despite the release of 2018 statistics revealing global warming is still on the up, the biggest polluting nations failed to present their planned increased efforts to stem climate change. While a compromise was reached on smaller elements, the anticipated updated plans of the biggest nations like China, India, and the US, was pushed back to next year’s COP26 in Glasgow, as was the decision around a global carbon market.
At the start of the conference, António Guterres, the UN secretary-general, spoke about the importance of resolving the issue of carbon pricing.
“To put a price on carbon is vital if we are to have any chance of limiting global temperature rise and avoiding runaway climate change. Operationalizing Article Six will help get markets up and running, mobilize the private sector, and ensure that the rules are the same for everyone.”
Unfortunately, despite the pressurized two weeks and the extension of the conference until Sunday at 6pm (it was due to finish on Friday), no agreement was reached on carbon markets. This will now be a key component of COP26 as campaigners continue the fight to change the mindset from coal to renewable energy.
Guterres further claims that “for the past year, I have been saying we need to make progress on carbon pricing, shift taxation from income to carbon, ensure no new coal plants are built after 2020, and end the allocation of taxpayers’ money for perverse fossil fuel subsidies.”
While there have been reservations over carbon pricing and fears that businesses move to other cheaper countries as a result of these taxes, Helen Mountford, writing for the Financial Times, believes economies in fact experience good growth and stability when a carbon tax is implemented.
“This is because carbon pricing can drive efficiency — a carbon price corrects market distortions so that polluters have to pay the full cost of their activities; it drives industrial modernisation and helps ensure competitiveness.”
Carbon pricing is becoming a more favorable option for countries and political establishments, although only 40 governments have implemented it so far. As referenced in my article earlier this month, carbon pricing, when properly harnessed, can be a key financial contributor to solving social problems (e.g., reducing employment taxes for the worst affected), “offsetting fiscal imbalance” as was done in Ireland after its economic crash and improving national green energy initiatives. Yet a carbon tax still continues to be a tough sell. With the can being pushed down the road for another year, can governments find a way to “to tax pollution, not the people”?
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