I4CE inputs to the Commission “Stiglitz-Stern” on carbon prices

A high-level international Commission

Launched in November 2016 at the COP22 in Morocco, at the invitation of the two Co-Chairs of the Carbon Pricing Leadership Coalition (CPLC) High Level Assembly, Ségolène Royal and Feike Sijbesma, the High-Level Commission on Carbon Prices, led by the two famous economits Joseph Stiglitz, and Lord Nicholas Stern, gathers 11 economists, climate change and energy specialists from all over the world, to help spur successful implementation of the Paris Agreement.

The Commission’s objective was to identify indicative corridors of carbon prices which can be used to guide the design of carbon pricing instruments and other climate policies, regulations, and measures to incentivize bold climate action and stimulate learning and innovation to deliver on the ambition of the Paris Agreement and support the achievement of the Sustainable Development Goals.

The report of the Commission

The Commission has disclosed its report on 29 May 2017.

Report – English version

Its key messages :

• The Commission recognizes that different countries will choose different instruments to implement their climate policies and put a price on carbon, depending on national and local circumstances and on the support they receive.

• Based on evidence from industry, policy experience, and relevant literature, and taking into account the strengths and limitations of the respective information sources, this Commission concludes that, in a supportive policy environment, the explicit carbon-price level consistent with the Paris temperature target is at least US$40–80/tCO2 by 2020 and US$50–100/tCO2 by 2030.

• The appropriate carbon-price levels will therefore vary across countries. In lower-income countries they may actually be lower than the ranges proposed, in part because complementary actions taken may be less costly or because the distributional and ethical issues to be tackled may be more complex.

• Of vital importance for the effectiveness of climate policy, particularly carbon pricing, is that future paths and policies not only be clear but also credible.

• The implementation of carbon pricing would also need to duly consider the non-climate benefits of carbon pricing (for instance, the generation of additional government revenue), the local context, and the political economy (including the policy environment, the adjustment costs, the distributional impacts, and the political and social acceptability of the carbon price). Depending on the other particular policies adopted, large co-benefits may be derived that go beyond climate such as lower pollution and congestion levels, healthier ecosystems, broader access to modern energy, and so on.

The contribution of I4CE

To feed the production of this report, I4CE has provided commissioners and authors with three recommendations to make the report useful for decision-makers (economic players, governments, financiers, international agencies):

1. Define a vision of what a net-zero emission world by 2050 requires, explaining conditions to achieve this Paris agreement target and all underlying assumptions by providing a range of appropriate social carbon costs.
2. Provide guidance for policy-makers and economic players to develop their own price that reflects national and local circumstances – the report could provide an explicit insight on how a low-carbon vision can be translated into and achieved by applying a carbon price or value.
3. Establish a process that continues to support the updating of the “confidence corridor” after the release of the report. This could inter alia involve establishing a framework to update and insert carbon values into the Global Climate Change Agenda, UNFCCC, Paris Agreement landscape, etc.

January 2017 :  I4CE input to the Commission – How to make the report the most comprehensible and impacting for public and private decision makers to foster their climate actions.

January 2017: Presentation at the informal meeting in Paris organised by France Strategies :  Do internal carbon prices make a difference on corporate strategies?