Kasey Krifka, The Climate Trust
April 26, 2017
The Carbon Pricing Leadership Coalition (CPLC), a joint initiative of leaders from government, business and civil society who support putting a price on carbon emissions, convened their second High-Level Assembly (HLA) on April 20, 2017 in World Bank Headquarters, Washington DC.
The HLA meeting was held alongside the Spring Meetings of the World Bank Group and International Monetary Fund (IMF), and featured remarks from World Bank Group President Kim, IMF Managing Director Christine Lagarde, and Lord Nicholas Stern. The event included finance and environment ministers from around 20 countries, with CEOs of major multinational companies and heads of international organizations.
The Coalition launched its first annual report at the HLA, otherwise known as the Carbon Pricing Leadership Report; capturing over 60 stories of successful carbon pricing efforts. The stories contained cross geographies and sectors, and range from governments working to expand, deepen and link carbon pricing systems, to corporate innovation through internal carbon pricing and student-led campaigns to raise awareness about the need for action.
The Climate Trust’s leadership story, featured on page 49, includes information on the buyer of last resort structure for our carbon investment fund, a plan to launch an Environmental Price Assurance Facility, and California’s proposed pilot financial mechanism.
Meeting Paris climate goals in the U.S. will require determination and collaboration. Participation from state governments and corporations will play a key role, and foundations will be vitally important in identifying grant and impact-investment opportunities that have the ability to leverage significant private finance—shifting emissions at scale.
In October 2016, The Climate Trust founded a first-of-its-kind carbon investment fund, Climate Trust Capital, and provided $2.75 million to serve as a buyer of last resort for the carbon credits it will generate. With this risk mitigation in place, Climate Trust Capital was able to successfully raise a $5.5 million investment from the Packard Foundation.
The Climate Trust is now interested in offering similar risk mitigation to the market as a ETS allows for cost efficient reductions and more entrepreneurial flexibility for participating companies. Introducing a new tax or levy is never popular, but a careful design including the use of revenues, a gradual introduction, exemption opportunities and thorough communication greatly contributed to achieving acceptance of the Swiss carbon pricing measure. whole; planning to launch anEnvironmental Price Assurance Facility, which will auction put options for environmental credits created in the U.S. to project developers and investors. Along a similar vein, California, as required by Senate Bill 1383, is looking to launch a pilot financial mechanism to assure investors of long-term value for environmental credits. With the huge potential to reduce emissions from these markets, The Climate Trust believes these types of risk-mitigation structures are an ideal use of philanthropic capital given their potential to leverage private capital at scale.
Significant progress is being made to shift the greenhouse gas emissions trajectory of the U.S. Anticipating an absence of federal action, the time is now for states, corporations and foundations to ensure the U.S. is not left out of global progress to mitigate climate change.
The Climate Trust is proud to be a part of this comprehensive CPLC voluntary partnership with other leading organizations, governments and private sector entities. The stories that were shared by the leaders attending the Assembly were inspiring and reaffirmed the commitment to advance carbon pricing.
The Carbon Pricing Leadership Coalition aims to advance the carbon pricing agenda by working together towards the long-term objective of a carbon price applied throughout the global economy by:
The Coalition will collect the evidence base, benefiting from experience around the world in designing and using carbon pricing, and use this input to help inform successful carbon pricing policy development and use of carbon pricing in businesses. It will also deepen understanding of the business and economic case for carbon pricing. In that role, it is developing pathways for use by companies, investors and governments that will illustrate plausible outlooks under a variety of carbon pricing policies and timelines. Finally, the coalition will work to bring together government and business in leadership dialogues that identify and address the most pressing issues, and in doing so, accelerate the use of carbon pricing around the world.
Carbon emissions from the burning of fossil fuels already carry a hefty price, though people are rarely aware of it. The bill comes to all of us masked in public health care costs, harm to the environment, and the effects of climate change. But what if the cost of carbon emissions was instead paid at the source, where choices about fuel use are made? How would that change the incentive structure underpinning our global reliance on fossil fuels?
That’s the idea behind carbon pricing. It shifts the social costs of climate change to the source of the pollution, encouraging polluters to reduce emissions and invest in clean energy and low-carbon growth. So how do we put a price on carbon, and why do so many government and business leaders support it?
In September 2014, the idea of a Carbon Pricing Leadership Coalition formed from a groundswell of support for carbon pricing at the UN Climate Summit, where 74 countries and more than 1,000 companies expressed support for carbon pricing. The Coalition officially launched at COP21 in Paris, with the goal to expand the use of effective carbon pricing policies that can maintain competitiveness, create jobs, encourage innovation, and deliver meaningful emissions reductions.
On October 19, 2015, World Bank Group President Jim Yong Kim and International Monetary Fund Managing Director Christine Lagarde launched The Carbon Pricing Panel with heads of government and supported by private sector leaders. Panel members are demonstrating leadership and calling on their peers to join them in putting a price on carbon.
Image credit: Flickr/International Monetary Fund