A simple choice – 4°C or a carbon price

As if following on deliberately from the PWC report which I wrote about last week, come two new initiatives announced this Monday.

The first is a report from the World Bank and is the flip side of the PWC finding that a 2°C goal is now effectively out of reach. Turn Down the Heat: Why a 4°C Warmer World Must be Avoidedhas been commissioned by the Climate Change Adaptation team at the World Bank, utilising the expertise of the Potsdam Institute for Climate Impact Research. Starting with the impacts that we are already seeing in a 0.8°C world, it looks at the unsettling prospects of a 2°C world and then the somewhat alarming implications of letting the climate issue slide and all of us wandering, eyes wide open, into a 4°C world.

The report is measured in its approach, not relying on histrionics to gets its message across. Rather, by stepping through the issue in terms of areas of concern against current observations, 2°C and 4°C impacts it gives the reader clarity in terms of where we are now, the political space currently targeted and the expected consequences in the medium term of not acting. The report also notes that impacts such as sea level rise will play out over many hundred of years, causing ongoing disruption over that period. A wealth of data is presented from a variety of sources, covering concerns such as ocean acidification, ice loss (sea level rise), extreme temperature events, agricultural impacts, water stress, disease vectors, non-linear change and changes to critical eco-systems.

The President of the World Bank Group, Dr. Jim Yong Kim sums up the issue very clearly in his forward:

We are well aware of the uncertainty that surrounds these scenarios and we know that different scholars and studies sometimes disagree on the degree of risk. But the fact that such scenarios cannot be discarded is sufficient to justify strengthening current climate change policies. Finding ways to avoid that scenario is vital for the health and welfare of communities around the world. While every region of the world will be affected, the poor and most vulnerable would be hit hardest. A 4°C world can, and must, be avoided.

Avoiding 4°C brings me to the second initiative of the day, the Carbon Price Communique. This is a statement released at an event in Brussels by the The Prince of Wales’s Corporate Leaders Group on Climate Change (CLG), a group which brings together business leaders from major UK, EU, and international companies who believe that there is an urgent need to develop new and longer term policies for tackling climate change. The statement serves as a timely reminder of the need for a carbon price within the global energy system, ideally delivered through national and regional market based policies such as the ETS in Europe. The Communique follows from similar statements in previous years, but is much more focussed on a specific policy recommendation that all governments now need to take on board. At launch, the Communique had been signed by well over 100 companies, with the numbers growing daily.

The Communique goes beyond the CLG and includes input from the International Emissions Trading Association (IETA) and the World Business Council for Sustainable Development (WBCSD). This adds strength to the effort and hopefully brings even wider business support.

At the heart of the Communique is the key ask:

Putting a clear, transparent and unambiguous price on carbon emissions must be a core policy objective. Although there are a number of mechanisms that can be used to do this, as businesses we would focus on working through the market, utilizing approaches such as emissions trading which offer both environmental integrity and flexibility for business. A price on carbon will reveal the lowest cost pathway to existing emissions reduction goals and can open the door to increased ambition. 

The strongest evidence for the need for a carbon price comes from one technology, carbon capture and storage. Without it, there is little possibility of balancing rapidly growing energy needs against an atmosphere with a finite capacity to hold CO2 and stay below a given temperature threshold. But getting CCS will require a price on CO2 emissions. Along the way, a clear pricing structure will deliver rapid fuel switching, new bioenergy technologies and renewable power generation. But the eventual prize is CCS, also because it is currently the only known approach to deliver a reliable negative emissions scenario which the World Bank 4°C report identifies as the necessary approach to actually reverse some of the damaging impacts it identifies (e.g. ocean acidity beginning to recover by the end of this century).

More companies need to read, recognize and sign the Carbon Price Communique in the coming weeks.

The PWC report is a reminder that the lack of substantive action today has consequences. In support, the World Bank has given us a clear heads up on what those consequences are. Finally, there is the Carbon price Communique and the growing level of business interest behind it. This is what governments now need to do and it is clear that a significant portion of the business community is there to support such action.