Carbon pricing: a global opportunity

Putting a price on carbon pollution is widely recognized as the most cost effective policy to cut emissions. And if there were any doubt about this, Canada is the proof. Canada has had carbon pricing in place in every jurisdiction since 2019. Since then, we’ve seen first-hand how this policy has helped cut emissions while putting money back in people’s pockets and spurring innovation.

We have set our carbon price trajectory all the way to 2030 to provide certainty for households and businesses. Our approach to pricing is flexible, adaptable, and focused on principles of equity. We use revenues to directly support households in a way that benefits low-income and vulnerable communities the most. We have different pricing systems in different parts of the country that are tailored to local economies. We have designed our systems to decarbonize industries while also supporting their competitiveness and limiting the risk of carbon leakage. 

Pollution pricing is doable, it works, and it’s worth fighting for —not just in Canada but around the world. After all, climate action isn’t something any one country can do alone. That’s why at COP26, I challenged countries to adopt or expand carbon pricing, with a goal of tripling global coverage from around  20 percent  of global greenhouse gas (GHG) emissions today to 60 percent by 2030. In the months since, I have been heartened to hear support for this goal from leaders around the world.

Countries are working together to align policies and coordinate efforts, through organizations like the G7 Climate Change Mitigation Working Group, the International Monetary Fund, the Organisation for Economic Co-operation and Development (OECD), and the Carbon Pricing Leadership Coalition. Through initiatives like the World Bank’s Partnership for Market Implementation, countries are sharing best practices and supporting emerging systems. The momentum is there. So let’s keep going.  

I am calling on governments and businesses to make new carbon pricing commitments. For those already pricing pollution, it could be a commitment to higher prices, expanded coverage, or technical support for emerging systems. In Canada, our price on carbon pollution will rise to $170 per tonne by 2030. For those not yet pricing pollution, it could be a pledge to put a system in place. Canada will be ready with a new commitment of our own to help guarantee the future price of carbon pollution, so that businesses can plan investments knowing that the price will increase as planned. 

I spent the first six years of my time as Prime Minister working for pollution pricing at home. I’m ready to spend the years ahead bringing this work to the world stage. Climate change is a daunting challenge that can only be met by fully deploying our best, most economically efficient tools. And that means backing a global effort to ensure it is no longer free to pollute anywhere.

This piece appears in the Carbon Pricing Leadership Report 2021-22. The full report is available for download here.

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Justin Trudeau is Canada’s 23rd Prime Minister. His vision of Canada is a country where everyone has a real and fair chance to succeed. His experiences as a teacher, father, leader, and advocate for youth have shaped his dedication to Canadians.

As Prime Minister, Justin leads a government that works hard to continue moving Canada forward. His team is focused on fighting climate change, creating good middle class jobs, making life more affordable, keeping Canada's communities safe, and moving forward on reconciliation with Indigenous Peoples.

Carbon pricing’s watershed moment: Leadership Coalition reflects on 6 years since Paris

Carbon Pricing Leadership Coalition’s High-level event hosted by Right Honourable Justin Trudeau, Prime Minister of Canada and the Right Honourable Lord Barker of Battle, High-Level Co-Chair of the Carbon Pricing Leadership Coalition at COP26. Photo: CPLC

Six years ago, leaders from the World Bank, International Monetary Fund, governments, businesses, and nongovernmental organizations came together on the sidelines of COP21 in Paris to launch the Carbon Pricing Leadership Coalition (CPLC) and firmly place carbon pricing on the global agenda. Today, we are at a watershed moment for carbon pricing. Once relegated to the corridors of policy, carbon pricing is now a vital tool in the arsenal of measures that must be utilized to achieve the Paris Agreement and reach net-zero by 2050.  Some 65 carbon pricing initiatives have been implemented globally. And, after half a decade of negotiations, Article 6 of the Paris Agreement rulebook on international cooperation through carbon markets was agreed to by governments at the UN climate talks at COP26 in Glasgow – potentially accelerating the adoption of a carbon price.

"Once relegated to the corridors of policy, carbon pricing is now a vital tool in the arsenal of measures that must be utilized to achieve the Paris Agreement and reach net-zero by 2050."

The CPLC has been central to building support for carbon pricing.  A trusted and respected platform, the Coalition has strengthened the case for a price on carbon by collecting the evidence base, deepening understanding of the business and economic case for it, and by facilitating government and business leadership dialogues on pressing carbon pricing issues. The High-Level Commission on Carbon Prices, convened by the CPLC and co-chaired by Nobel Laureate Joseph Stiglitz and Lord Nicholas Stern, brought together leading economists from developed and developing countries to identify the range of carbon prices that would help reach the Paris Agreement goals. The report found that a carbon price of $50-$100 per ton by 2030, when combined with supportive policies, would allow for the achievement of the goals set out in the Paris Agreement.  The High-Level Commission's findings on the social cost of carbon are widely accepted as the benchmark and have been referenced in over 54,000 media articles discussing a carbon price.

Since its launch, the Coalition's work has made CPLC a one-stop shop to support carbon pricing action – helping build government capacity, link markets, and scale up climate finance.  The Faster Principles, published in CPLC's inaugural year, provided a much-needed guide on principles for effective carbon pricing. Building on this, the CPLC, in collaboration with the Partnership for Market Readiness, released the Guide to Communicating Carbon Pricing to support partners’ outreach to stakeholders. 

By elevating the economic case for carbon pricing, the CPLC supports companies, investors, and governments in understanding scenarios under various carbon pricing policies and timelines. CPLC's High-Level Commission on Carbon Pricing and Competitiveness Report explored competitiveness concerns from industry and government peers in the corporate and public sectors. It provided an objective basis to embolden ambitious action to price carbon. The latest Net Zero Goals and Carbon Pricing Report from CPLC laid out how to harness the potential of carbon pricing in implementing strategies to get to net-zero emissions by mid-century. 

"By elevating the economic case for carbon pricing, the CPLC supports companies, investors, and governments in understanding scenarios under various carbon pricing policies and timelines."

CPLC has advanced and mainstreamed the carbon pricing agenda for six years. However, we are now at a unique moment where there is a need for the continuous evolution of the Coalition's work to inspire confidence in carbon pricing as an effective tool to combat climate change. At a CPLC-convened High-Level event at COP26, Canadian Prime Minister Justin Trudeau issued a call to action to get 60% of emissions covered by a price on carbon by 2030. Through its technical expertise and convening power, the Carbon Pricing Leadership Coalition is strategically placed to provide a platform to amplify a response to this call to action, inspire others to follow suit, and help increase the adoption of carbon pricing.

This was originally published on Development and a Changing Climate World Bank Group Blog

Getting credible carbon credit pricing

The low cost of carbon credits undermines the objective of carbon pricing: to reduce emissions at the source. This partly explains why the use of carbon credits is so controversial. We need to reconnect carbon pricing with carbon contributions so companies can effectively decarbonize while making a real impact on the planet.

What’s the problem?

It starts with the way companies define their carbon strategies. CSR teams pick – sometimes arbitrarily – which business activities to offset and then negotiate a budget that’s divided by the number of CO2 tons needed to meet climate targets. That’s how companies price and buy carbon credits today.

This approach is flawed. An arbitrary budget will inevitably decrease and won’t keep up with the increasing price of carbon credits1. More importantly, the price signal isn’t set by the market, it’s set by companies’ willingness to finance decarbonization.

Project developers are left out of the pricing discussion, even though their work makes the existence of carbon credits possible. What’s worse is this creates unfounded competition between projects.

Take two similar climate projects: one only relies on carbon credits to fund activities; the other has other sources of funding. When they enter the carbon market, the first project asks for a higher price per ton of CO2 to cover its costs, while the second project can sustain a lower carbon pricing. In the end, these two projects generate carbon credits at different values even though they have the same impact on the planet.

In this system, the carbon credit isn’t a price signal. It’s a consumable unit.

How to bring more coherence in carbon credit pricing?

Companies need to move past the sheer number of CO2 removed and see their financial contributions to carbon neutrality as a key indicator of their climate performance. By creating a carbon contribution budget based on an internal carbon price, companies can invest in decarbonizing their products or services and in carbon credits."

With this system, companies would no longer depend on the evolution of the voluntary carbon market. The climate projects you support drive investment decisions – not the number of carbon credits that fit into a budget.

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Renaud Bettin, Head of Climate Action at Sweep. Renaud is a renowned expert in the field of climate action, encourages cooperation between companies to achieve the goal of carbon neutrality. In charge of climate action at SWEEP, he is involved in the creation of a software that facilitates the management of climate action by companies.

Leadership to decarbonize the energy transition

At AMEA Power, a Dubai-based leading developer, owner and operator of renewable generation assets & power plants with a primary focus on the Middle East, Africa & Emerging Asia, we endeavour to do business sustainably with a positive social impact on the local communities. Starting in early 2021, as global trends began to pick up in the carbon credits space, AMEA Power created a devoted team of key renewable energy professionals to understand better and analyze the market. With projects in multiple geographies around developing countries, it is important for AMEA Power, with 2GW of pipeline and 1GW of projects at advanced stages of development, to understand the impact the offset of carbon footprint our projects have in each of these countries.

In addition to our primary business of bilaterally negotiated government renewable generation power projects, AMEA Power Carbon Credit Trading Team and AMEA Power's Commercial & Industrial division play a key role in taking our insight, exposure, and understanding, to educate high-level country officials, ministers and presidents; key business leaders and the general public. As well movement in carbon pricing comes as banks and other financial institutions take a firm stance on Environmental, Social and Governance (ESG) and raise the bar for corporates to qualify for specific financial products, in turn obliging private and public companies to look at improving their impact on the environment. One way is to offset their "brown" electricity consumption or carbon emissions by purchasing voluntary carbon credits. This is an asset/instrument that AMEA Power produces from all of its renewable generation power plants.

Understanding the policies in the respective geographies and relevant levers that impact the pricing of carbon credits is imperative for AMEA Power in order to maintain a fair, compliant and ethically sound market for a sustainable future. As the market is forecasted to increase almost tenfold in the years to come, the importance of carbon pricing grows. Moreover, it is essential to understand that the price varies from country to country, based on the country's respective carbon emission factor and economic development.

We at AMEA Power, believe our strategic foothold across several geographies in Africa, the Middle East, and Asia will be a strong and positive contribution to the Carbon Pricing Leadership Coalition's future goals. Furthermore, we firmly believe that pricing carbon can be a complementary tool to support the development of the local communities by empowering them at different levels of the value chain of the renewable energy projects and stimulating the economic growth of the hosting geographies. This is a crucial objective of AMEA Power, so we are pleased to join the CPLC to offer our industry expertise to solve and overcome the rising challenges of carbon pricing.

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Hussain J. Al Nowais is the Chairman of AMEA Power. He is a global industrialist and serial entrepreneur with over 30 years of experience in investing, developing and managing businesses in the Middle East, Africa and Asia across multiple sectors, including financial services, private equity investments, heavy industries and logistics zones development, infrastructure developments, public-private partnership, project finance, hospitality and real estate.

Mr. Al Nowais is the Chairman of AlNowais Investments, where he spearheads the firm's strategy of global expansion, investment, and strategic project development across the firm's target sectors. He also serves as a Board Member of Rotana Hotel Management Corporation, a leading Middle East hotel owner and operator, and Abu Dhabi Commercial Bank, UAE's leading domestic bank. He is one of the founding members of Sandooq Al Watan, a national philanthropist and investment organization that provides Emiratis with guidance and funding for social impact projects with focus on technology and health care.

O&G Leadership for Advancing a Price on Carbon

ConocoPhillips believes that proactive, international engagement on the climate-related policy will be vital to achieving an orderly global transition to a low-carbon economy. Therefore, we are pleased to join the Carbon Pricing Leadership Coalition (CPLC) to more broadly share our support for the enactment of national carbon pricing policies by governments, thus enhancing international understanding of the benefits of implementation.

ConocoPhillips has long recognized the importance of advocating for a well-designed climate policy that is practical, equitable and cost-effective in reducing greenhouse gas (GHG) emissions. We have been actively engaged in climate-related discussions with policymakers and stakeholders since our first global climate change position was published in 2003. This includes joining the U.S. Climate Action Partnership (USCAP) in 2007 and supporting the American Clean Energy and Security Act of 2009 (the Waxman-Markey bill). In parallel, we have developed climate change action plans, set an emission-intensity target, integrated carbon-restricted scenarios into our strategic planning process and became the first U.S. based oil and gas company to adopt a Paris-aligned climate-risk framework to meet our net-zero operational (Scope 1 and 2) emissions ambition by 2050.

We believe that the most effective method of reducing GHG emissions across the economy by enacting a well-designed price on carbon. Participation in an international policy institute like CPLC provides an opportunity for ongoing cross-border dialogue and knowledge sharing about carbon pricing opportunities and obstacles.

In addition, within the United States, ConocoPhillips is a strong supporter of the Baker-Shultz carbon dividends plan and a founding member of the Climate Leadership Council (CLC). We also belong to and fund Americans For Carbon Dividends (AFCD), the education and advocacy branch of the CLC. Through AFCD and direct action, ConocoPhillips has played an active and visible role in U.S. carbon price engagement and advocacy at all levels of our company. Most recently, our executives and staff have engaged with elected officials and their offices in support of the four-pillar Baker-Shultz carbon dividends plan, which consists of a gradually increasing carbon price, carbon dividends for all Americans, border carbon adjustments and regulatory simplification.

We believe that the energy transition will be best facilitated through collaboration around effective, well-thought-out policy measures that governments enact worldwide. Therefore, we intend to continue working together internationally with a broad variety of stakeholders in order to advance carbon pricing as the best pathway to reducing end-use emissions across the global economy.

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Dominic Macklon is the EVP Strategy, Sustainability and Technology of ConocoPhillips. In this capacity, he oversees the teams responsible for corporate planning and development, global technical functions, information technology, sustainable development, low carbon technology and investor relations. Macklon has more than 30 years of oil and natural gas experience. He previously served as president, Lower 48, overseeing operations of the Gulf Coast and Great Plains business units, as well as land and commercial gas activities, finance, human resources and health, safety and environment. His earlier leadership roles included serving as vice president, Corporate Planning and Development, president, ConocoPhillips United Kingdom, and senior vice president, Oil Sands.

Stewardship in the Construction Industry

Investment in, and deployment of, innovative green technologies will position the construction industry as a force for change in the broader climate movement. As a major employer in Canada, the construction industry has the opportunity to play a positive role in the reduction of GHG emissions by advocating for responsible sustainable construction.

A balance is required between the advocacy for newer building techniques and materials and the cost implications of these emerging trends. As a whole, transformative approaches to building greener are tempered by the appetite and budget of clients. The primary role of builders and general contractors is to be knowledgeable about and proficient in the use of greener technology in order to advocate for their use on a range of projects, while being cognizant that the client may ultimately decide to utilize primarily conventional materials and processes. While awareness of carbon impacts, including carbon sequestration and offsets, is growing, there is still a sense of wariness about the implications for construction projects as there is a perception that these types of measures are costly in terms of money and time, and that the benefits are mostly intangible and abstract. For some clients, the importance of minimizing their impact on the environment overcomes these concerns. For others, cost remains an essential consideration. 

Being able to articulate the immediate and long-term benefits of employing environmentally friendly materials and processes is therefore critical. Many green technologies have matured, and the cost differential between conventional and green buildings has all but disappeared in some areas. Direct energy savings and lower operations and maintenance costs alone can offer significant advantages over traditional builds. Furthermore, the adoption of greener materials and processes, including mass timber, modular construction, and prefabrication, will be accelerated by the introduction of new regulatory requirements, which are already being seen across Canada and internationally, albeit in select sectors so far.

Bird’s role as an environmental steward in the construction industry is to act as a conduit for bringing new low carbon initiatives to the construction market, advising clients on the range of green solutions that are available and appropriate for their projects. Bird advocates a holistic approach to all aspects of sustainability, from the products in our supply chain and the materials we use in our projects, to the way we build.

In order to deliver on the technologies presented to clients, Bird is committed to developing the expertise of our teams. In addition to having LEED-accredited professionals across the country, targeted sustainability-focused Centres of Excellence and Task Forces have been convened. This enables the sharing of knowledge and best practices across the organization, and drives a culture of innovation around green technology and processes, including mass timber and net-zero.

The Mass Timber Centre of Excellence is well-established, and Bird is a recognized North American leader in wood construction. Mass Timber is more than a low carbon renewable resource. Through sustainable forestry, wood-based materials capture carbon and offset total CO2 emissions. At an end-user level, visible wood has been shown to improve productivity and happiness. As awareness of the versatility of wood construction grows, we are observing a transformation of the sector and seeing increasing opportunities to construct cost-effective and high-performance structures that are appropriate for a climate-smart future. This is particularly relevant for addressing housing shortages, for example, through mid-rise multifamily residential construction.

The Environmental Centre of Excellence has developed significant self-perform capabilities for processing facilities, as well as market expertise for major environmental projects, including water and wastewater, biosolids, and anaerobic digester facilities, waste to energy, and RNG/hydrogen. A recent example of work in this sector is Noventa’s innovative wastewater to energy project that will supply 1.8 billion kilowatt-hours of low-carbon renewable energy to Toronto Western Hospital.

The Net Zero Task Force focuses on expanding and promoting the range of expertise and services we offer to enable clients to achieve their net-zero goals through both new builds and retrofits, which will be a key strategy for carbon reduction. For example, the Mackimmie Complex Redevelopment Project at the University of Calgary combines iconic and sustainable design with modern technology and building analytics. The tower achieved net-zero carbon standards in 2020 and strives to be net carbon neutral for annual operations. It will be one of the most energy-efficient buildings on Canadian post-secondary campus and is an important case study for the future of high quality and efficient construction project delivery. Humber College Building NX in Toronto, Ontario is another example of a building that through a deep energy retrofit, has been transformed into the most energy-efficient building on campus, and one of the most energy-efficient buildings in North America.

Taking a more expansive view of the entire project lifecycle informs our approach to sustainability.  We must think beyond what materials we use and the methods we employ to construct our projects. These are important elements that can have immense impact, but we must also consider the structure we leave behind and how it will age and interact with its environment. The Centre for Building Performance (CfBP) assists with this dimension by integrating building systems to ensure smarter, more efficient, environmentally-friendly buildings. In other words, the CfBP optimizes the sustainability of building systems and minimizes long-term environmental impacts by ensuring that buildings and systems within buildings operate at peak efficiency.

Bird’s partnership with the CPLC will expand the conversation on how infrastructure is procured and what motivates material decisions, as well as explore means to reduce the impact of infrastructure on global warming. This essential dialogue must be rooted in the practical realities of the industry, and this requires open exchanges with clients about the available technologies and the impact that adoption of these greener solutions can have.

For more about Bird’s sustainability program, please visit our website or click here to view Bird’s 2020 Sustainability Overview.

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Patrick Crabbe is the Director of Mass Timber at Bird Construction – an integral and innovative role within the national Strategic Development team. Growing up within the sawmill and wood manufacturing sector, Patrick brings unparalleled expertise that is demonstrated through his $1 Billion worth of construction value experience and commitment to numerous agencies that are advocating for the use and benefits of mass timber as a sustainable and economical solution. In his role, Patrick supports 18 districts across Canada with a focus on providing constructability input during the design and pre-construction and construction phases, as well as educating project teams, clients, and the public. He is an active member of the Carbon Pricing Leadership Coalition (led by the World Bank) and a trusted advisor to Infrastructure British Columbia and the Canadian Wood Council.