Putting A Price on Carbon: From Lima to Paris 2015

 

 

 

Put a Price on Carbon

With emission targets, an international system can be set up to allow for the trading of carbon credits. However, a global price on carbon adds a price tag on development. Countries which are able to buy credits can continue with their emission trajectories by purchasing offsets while countries without sufficient resources may default on their INDCs.

 

The CDM scenario could play out again. An international carbon trading system will also be plagued by issues like proper accounting and environmental integrity of credits.

 

Furthermore, Parties have yet to determine the form and scope of INDCs. If INDCs are determined with respect to a baseline scenario such as a ‘business-as-usual’ emission trajectory, net emissions will continue to increase. Yet if INDCs are determined based on historical emissions, the issue of common but differentiated responsibilities resurfaces. Developed countries will have a higher baseline as they have passed the stage of industrialisation; developing countries, however, will have to grapple with an unrealistic emission target which is based on their current state of development.

 

The question is whether it is fair to have a single global carbon price for both developed and developing countries.

 

Governments Need to Put a Price on Carbon

The spectre of the collapse of the Kyoto Protocol may cause Parties to have less ambitious targets. However, it is time for ambitious but achievable contributions for the world to move towards the 2⁰C target together. INDCs should require difficult and concrete shifts to clean energy production and consumption; but it should not place a burden that is so great on a country that it jeopardises development, lest the country defaults on its promise.

 

It is imperative that parties should consider the impacts of climate change on their economies and societies instead of merely the economic cost of carbon that their countries will have to bear when crafting their INDCs. Carbon pricing should be seen as a mechanism for governments to achieve these targets within their countries.

 

This gives governments greater autonomy to create policies to meet their emission targets without having to rely on an international system which could place an unrealistic price on carbon. Wrongful price signals could push industries to deviate from emission reductions.

 

Countries should not be overly hopeful that a price on carbon will bring us closer to our target; only genuine commitments will. At the end of the day, Parties need to recognise that a watered down agreement in Paris can reduce their commitments to the international efforts to tackle climate change, but it does not reduce their national commitments to providing development and security to their citizens.

 

In the global commons, the actions of one will have far-reaching impacts for all.

 

 

Goh Tian and Jonatan A. Lassa are researchers with the Centre for Non-Traditional Security (NTS) Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.