06 Sep 2023 | 10:24 UTC

ROAD TO COP28: EC's von der Leyen calls for global carbon price proposal

Highlights

Urges African nations to set up carbon pricing mechanisms

Plan for 'true carbon credits' also needed

EU's ETS proving effective in reducing emissions, earning revenues

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European Commission President Ursula von der Leyen called for international leaders to cooperate on formulating a plan for a global carbon price at this year's UN Climate Change Conference, taking place in Dubai, UAE, from Nov. 30 to Dec. 12.

Speaking at the Africa Climate Week event in Nairobi, Kenya on Sept. 5, von der Leyen also urged African leaders to set up carbon pricing regimes such as an emissions trading scheme or a carbon tax.

"Let us work together to bring a proposal for global carbon pricing and true carbon credits at COP28," she said.

"I believe... that setting a price on carbon emissions is one of the most efficient and one of the most effective tools in our hands. Because it fosters innovation by the private sector -- that is crucial," she said.

"Because it makes heavy polluters pay a fair price -- that is necessary. And because it creates revenues that can support the clean transition in developing countries -- that is what we need."

More governments are looking to use carbon pricing as part of their climate policies, as they can provide a source of revenue, while helping companies assess the impact of climate change on their operations and investments. But so far, the number of countries or regions using such instruments remains relatively small.

As of April 2023, there were 73 carbon taxes or ETSs in operation, according to the World Bank, but with very few operating in Africa.

Carbon prices currently vary significantly on a country-to-country basis as there is no global carbon price. Carbon permits under the EU ETS are almost 10 times more expensive than compliance prices in China, the industrial powerhouse of the world.

Platts, part of S&P Global, assessed EU Allowances for December 2023 at Eur84.03/mtCO2e ($90.14/mtCO2e) on Sept. 5. This compared to China's compliance emissions price, which was valued at Yuan 68.43/mtCO2e ($9.53/mtCO2e) on Sept.1, according to the Shanghai Environment and Energy Exchange.


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