The Paris Agreement’s entry into force during late 2016 sent the clearest possible signal that transition to the low-carbon economy is now inevitable.
However, the first round of Nationally Determined Contributions (NDCs) submitted by Parties, even if fully implemented, will not deliver the long-term goals of the Paris Agreement.
Encouraging private sector investment and commercial financing solutions will be critical for success.
Last week’s Innovate4Climate conference in Frankfurt helped illustrate that unprecedented climate action is essential for making the investments required to achieve the Paris Agreement objectives.
The Conference has become an important date in the climate calendar as it aims to enhance the dialogue between governments, business, multilateral agencies, banking and finance, technology leaders and innovators, in pursuit of climate finance, sustainable development, carbon pricing and markets.
This year’s conference brought together leading stakeholders, inspiring dialogues on developing innovative financing instruments and approaches to support low-carbon, climate-resilient development pathways. This included for example, several sessions that explored the role of innovative technologies such as blockchain, to drive climate investment at scale.
As the world faces ever-increasing constraints on resources, investors are looking at innovative and disruptive forms of finance to fund investments to accelerate the transition to a low-carbon future.
One of the keys to addressing climate change will be accelerated mobilization and access to finance for longer-term, climate-smart investments. This will only be achieved be developing the necessary enabling environments and by maximizing the use of public and private resources.
The conference therefore included workshops around the thematic areas of enhancing the business case for climate investment, improving access to finance for NDC implementation, innovation technologies and finance instruments for climate resilience, as well as how carbon markets can deliver ambitious and cost-effective mitigation efforts.
Some of the highlights include:
WBCSD Carbon Pricing report
During the conference, WBCSD presented its in-depth guide for policymakers on carbon pricing. WBCSD and its members believe that carbon pricing is one of the most efficient means of driving the transition to a low-carbon world. The focus has now shifted to understanding the “what” and the “how to get it done.
“Carbon pricing is an accepted concept for managing carbon emissions and many jurisdictions are looking to implement one instrument or another,” said Rasmus Valanko, Director of Climate & Energy at WBCSD. “We want to take the discussions to the next level of detail, helping policymakers with the choices they need to make.”
WBCSD’s Carbon Pricing report is therefore intended to be a useful tool for companies to start the conversation with national governments and stakeholders, to inform such consultations, and assist in delivering the decisions required to implement the most suitable policies.
IETA survey finds fresh optimism for global carbon markets
During the Conference, IETA also launched the results of its annual GHG Market Sentiment survey. The findings show that while respondents have serious concerns about the gap in ambition between current trends and the Paris Agreement’s objectives, they are increasingly optimistic about the prospects for emissions trading around the world. Uncertainty remains as to whether this year’s UN climate talks will reach agreement on the Paris Agreement rulebook or on the status of the CDM after 2020.
“The last 12 months brought a burst of energy to emissions trading around the world, from Latin America, across North American jurisdictions, and in China,” said IETA President and CEO Dirk Forrister. “Governments are getting serious about seizing the power of markets to achieve their climate goals.”
The responses to the survey conducted by PwC showed a positive sentiment towards emissions trading around the world. A large majority of respondents also warned if China’s ETS is not considered a success by the global community, the reputation of emissions trading worldwide will be affected. However, respondents also expressed the belief that the launch of China’s ETS will encourage other countries to implement a carbon price.
“Governments need to get real about their climate ambition and start implementing policy in line with the Paris Agreement,” said Jonathan Grant, Director of PwC’s climate team. “There is real momentum behind carbon markets around the world – price expectations are on the rise again. And there are high stakes on the trading system in China. Success there could inspire other countries to follow, but if it fails it could undermine action around the world.”
IETA Talanoa Stories
On the final day of the event, IETA also launched its Talanoa Stories project aimed to support the UNFCCC process as it moves towards agreeing the rulebook for implementing the Paris Agreement.
IETA’s Talanoa Stories present its members’ experiences and showcase their ambitions to help achieve the Paris Agreement objectives. The project supports the formal Talanoa Dialogue under the UNFCCC as an important private sector contribution towards raising ambition under the Paris Agreement. Through these stories from IETA members highlight their commitment to the Paris goals, and underline how a price on carbon can drive private sector investment to achieve emissions reductions.
This event marked an important step for policymakers and businesses to engage on the road to COP24 and 2020. WBCSD and its members will be following the evolution of carbon markets and the Paris Rulebook closely in the coming year.