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Carbon Minus India (CMI) CMI-IISD National Carbon Finance Leadership Network (CINCFLN)
The Background
The dangerous consequences of Global Warming, linked to climate change are clearer now, than ever before. According to the latest IPCC report, the climate consequences of a 2°C world are far greater than that of 1.5°C and we are not on track for either. A 1.5°C world could reduce the number of people both exposed to climate-related risks and susceptible to poverty by up to several hundred million by 2050 compared with 2°C. Without urgent action, climate impacts could push an additional 100 million people into poverty by 2030.
Climate impacts are already being felt in the form of extreme natural disasters and weather events that are negatively affecting crops and livestock. Moreover, climate impacts on human health have been steadily rising, with direct costs to health projected to be as high as US$ 4 billion per year by 2030. Significant financing is required over the next two decades around $90 trillion by 2030 is required for an orderly transition to a low carbon resilient global economy.
Yet, analyses indicate that countries’ implemented policies and Nationally Determined Contribution (NDC), under Paris agreement pledges fall far short of what is needed to keep the global temperature rise well below 2°C and pursue efforts to limit it to 1.5°C by 2100. Rapid, inclusive and climate informed development can prevent most of the impacts of climate change on extreme poverty by 2030.
Local climate action offers a major opportunity to ensure sustainable global development and boost economic growth. It is already delivering tangible results in terms of new jobs, economic savings, competitiveness and market opportunities, and improved well being for people worldwide with even greater investment, innovation, and growth potential ahead.
Policies, such as carbon pricing, can help further create incentives for transformational change.
Q. What is CINCFLN ?
Ans. CINCFLN is the CMI-IISD National Carbon Finance Leadership Network, established by CMI-IISD on 5th June 2011 at New Delhi.
Q. What is the role of this network ?
Ans. CMI-IISD National Carbon Finance Leadership Network (CINCFLN) is an initiative of Carbon Minus India (CMI), along with it's parent organization, Indian Institute of Sustainable Development (IISD),
New Delhi; in the larger interest of man-kind for the survival of the earth from Global Warming and other adverse impact of Climate Change.
The network is engaged to create a strongest platform, bringing all the relevent stackholders under the umbrella of a single network; involving Leading Politicians, Policy Makers, Industry and Business Leaders, Scientists, Academicians, Researchers from Universities, Reseach Institutes, Eminent Media Personalities, Women and Tribal Leaders, etc. etc. who will work together to generate necessary Carbon Finance for undertaking strongest local climate actions in India, to meet the global climate emergency today.
The Network, under Carbon Minus India (CMI) - is engaged to evolve a strategic framework for India as well as the planet, in identifying low carbon growth opportunities and guide / facilitate a series of planned and scaled-up programs, which would support to the on-going dialogues for establishing a climate friendly development path, which also strives for:
- Articulate a cost-effective strategy for further lowering the carbon intensity of the economy at the macro and sectoral levels that is beneficial for national growth objectives, by identifying synergies, barriers and potential trade-offs and financial needs to address these blockades
- Identify opportunities for and facilitate leveraging financial resources, including external finance, such as Carbon Finance (CF), to support of a low carbon growth strategy, as well as explore the possible need for new financing instruments; and
- Raise necessary Financial Resources as Carbon Finance to support India’s efforts to facilitate Local Climate Change Actions to meet the Challenges of Climate Change Adaptation to reduce Climate Vulnerability, Climate Change Mitigation and Climate Resilience and Disaster Risk Reduction for Our Cities, Villages and different Vulnerable Communities at Rural Areas.
Q. Who can be a CINCFLN member ?
Ans. Anybody who is professionally keen to be a part of this network, from United Nations, Governments, Policy Makers, Corporates, Industries, Businesses, Scientists,
Academicians and Persons from Civil Society Organizations, can be a Member.
Please write to us at
[email protected]
Following 2 Prestigious Committees are under formation. Those who are interested to nominate credible professionals in the the field of Carbon Finance, also may contact at [email protected]
- CMI-IISD Carbon Finance Leadership Network (CICFLN) - National Working Group
- CMI-IISD Carbon Finance Leadership Network (CICFLN) - International Steering Committee
Research and analysis are vital for effective carbon pricing design and implementation. With the goal of strengthening the carbon pricing knowledge base and fostering an improved understanding of the evolving challenges to its successful application, the Carbon Pricing Leadership Coalition convened researchers, practitioners, and interested stakeholders for the CPLC Research Conference. Over 30 researchers from across the globe presented papers on various carbon pricing themes. These papers have been selected through a review process by an international scientific committee comprising academics, researchers, and policymakers. The two-day Conference hosted over 300 participants and was centered around six central themes:
(1) Learning from Experience,
(2) Carbon Pricing Design,
(3) Concepts and Methods,
(4) Political Economy,
(5) Decarbonizing the Economy and
(6) Emerging Frontiers.
Why is 'Carbon Pricing' Necessary now ? Greenhouse Gas (GHG) Emissions must be reduced by at least 80 percent by
2050, if the climate is to be stabilized (IPCC/UNFCCC). By putting a Price on Carbon Pollution or GHG Emissions, We account for the true cost of these heat-trapping gases that caused the climate crisis of today, which ultimately contributed to Global Warming. In addition, Carbon Pricing also facilitates market incentives to enable a transition to the low-carbon economy of the future, while at the same time, providing much-needed funds for climate mitigation and adaptation.
Today, the real cost of greenhouse gas emissions is unfortunately hidden behind the massive subsidies to the fossil fuel industry in almost all countries, which in fact, lead to the overconsumption of these dirty fuels, without accounting for the environmental and public health threats of burning them.
Carbon emission pricing creates an incentive for companies and individuals to shift away from gasoline, natural gas, and coal etc fossil fuel based energy sources, toward clean energy sources such as solar and wind power etc and to use energy more efficiently. But the policy is also a tool for generating substantial revenue to invest in the transition to a clean economy, such as subsidizing clean (electric) vehicle purchases, increasing our solar, wind, small hydro, biomass, biogas, biofuel and other renewable energy capacity in all possible manner, making buildings more energy and water efficient and finding out, innovating, researching and developing new climate solutions; while greenhouse gases are curtailed drastically to a greater extent and our economy also can continue to grow, at the same time.
“Carbon pricing makes investments in low-carbon or carbon-free technologies attractive and ensures that fossil fuels are used most efficiently.”
— CHANCELLORANGELA MERKEL,GERMANY
WHAT IS CARBON PRICING ?
Carbon pricing is an approach to reducing Carbon-GHG Emissions (also referred to as greenhouse gas, or GHG, emissions) that uses market mechanisms to pass the cost of emitting on to emitters, based on “Polluter Pays” principle. Its broad goal is to discourage the use of carbon dioxide or any other GHGs – emitting fossil fuels in order to protect the environment, address the causes of climate change, and meet national and international climate agreements.
A key aspect of carbon pricing is the “Polluter Pays” principle. By putting a price on carbon, society can hold emitters responsible for the serious costs of adding GHG emissions to the atmosphere; these costs include polluted air, warming temperatures, and various attendants ills (threats to public health and to food and water supplies, increased risk of certain dangerous weather events). Putting a price on carbon can likewise create financial incentives for polluters to reduce emissions.
The benefits of carbon pricing are very significant. It is one of the strongest policy instruments available for tackling climate change. It has the potential to decarbonize the world’s economic activity by changing the behavior of consumers, businesses, and investors while unleashing
technological innovation and generating revenues that can be put to productive use. In short, well-designed carbon prices offer triple benefits: they protect the environment, drive investments in clean technologies, and raise revenue.
How Carbon Pricing Instruments Work ?
Carbon pricing instruments can take many forms. A wide range of approaches and paths allows governments, businesses, and institutions to select the method best suited to the broader policy environment.
A Carbon Tax puts a direct price on GHG emissions and requires economic actors to pay for every ton of carbon pollution emitted. It thus creates a financial incentive to lower emissions by switching to more efficient processes or cleaner fuels (i.e., less pollution means lower taxes). This approach provides a lot of certainty about price because the price per ton of pollution is fixed; but it offers less certainty about the extent of emissions reduction.
An Emission Trading System (ETS)—also known as a cap-and-trade system—sets a limit (“cap”) on total direct GHG emissions from specific sectors and sets up a market where the rights to emit (in the form of carbon permits or allowances) are traded. This approach allows polluters to meet emissions reductions targets flexibly and at the lowest cost. It provides certainty about emissions reductions, but not the price for emitting, which fluctuates with the market.
Under a Crediting Mechanism, emissions reductions that occur as a result of a project, by a business or government, or policy are assigned credits, which can then be bought or sold. Entities seeking to lower their emissions can buy the credits as a way to offset their actual emissions. This approach requires a formally recognized third-party verifier to sign off on the emission reduction before it is credited.
Under a Results-Based Climate Finance (RBCF) Framework, entities receive funds when they meet predefined climate-related goals, such as emissions reductions. Like crediting mechanisms, this approach requires the involvement of independent verifiers (in this case, to confirm that a goal has been met). By linking financing to specific results, RBCF facilitates carbon pricing and the creation of carbon markets, helps polluters meet climate goals, and stimulates private sector investment.
Under Internal Carbon Pricing, governments, firms, and other entities assign their own internal price to carbon use and factor this into their investment decisions. Used as part of a broader decarbonization effort, this approach encourages investment in low-carbon technologies and prepares institutions to operate under future climate policies and regulations. Internal carbon pricing generally takes two forms:
The first assigns a Shadow Price to carbon use—that is, determines its hypothetical cost. Entities calculate this price for their activities with the goal of managing climate risks and identifying opportunities in operations, projects, and supply chains to lower emissions and avoid locking their investments in long-lived high-carbon capital and infrastructure. For example, the World Bank Group has announced plans to apply a shadow carbon price to relevant investment projects using a price consistent with the recommendations of the High-Level Commission on Carbon Prices.
The second form is an Internal Carbon Fee that companies voluntarily charge their business units for their emissions. Funds generated from this fee are channeled back into cleaner technologies and greener activities that support low-carbon transition.
How to Structure an Effective Carbon Pricing Mechanism ?
Although the design of carbon pricing schemes will vary depending on specific policy objectives and contexts, effective schemes share some common characteristics. The FASTER Principles for Successful Carbon Pricing, a guide jointly developed by the World Bank and the Organisation for Economic Co-operation and Development (OECD), distills six key characteristics of successful carbon pricing based on the practical experience of different jurisdictions:
Fairness. Effective initiatives embody the “Polluter Pays” principle and ensure that both costs and benefits are fairly shared.
Alignment of Policies and Objectives. Carbon pricing is not a stand-alone mechanism. It is most effective when it meshes with and promotes broader policy goals, both climate and non-climate related.
Stability and Predictability. Effective initiatives exist within a stable policy framework and send a clear, consistent, and (over time) increasingly strong signal to investors.
Transparency. Effective carbon pricing is designed and carried out transparently.
Efficiency and cost-effectiveness. Effective carbon pricing lowers the cost and increases the economic efficiency of reducing emissions.
Reliability and environmental integrity. Effective carbon pricing measurably reduces practices that harm the environment.
Challenges in Designing Effective Carbon Pricing
A well-designed carbon pricing mechanism can spur innovation and investments in low-carbon technologies that offer competitive advantage. But achieving the right design can also entail certain challenges:
Carbon leakage. Some schemes have had the effect of hindering business competitiveness. When there is an inconsistent patchwork of carbon pricing policies and regulations at the regional and global levels, the result can be carbon leakage—that is, the phenomenon by which carbon-intensive industries or firms shift operations to lower-cost jurisdictions. According to the
Partnership for Market Readiness (PMR), however, this practice can be discouraged through targeted and well-designed policies—such as product or investment tax credits, research and development support, and business support services.
Policy overlap or inconsistency. Carbon pricing instruments can be significantly more effective if they are properly aligned with complementary policies, such as energy efficiency policies, emissions performance standards, and research and technology policies, among others. Policy makers must work carefully and deliberately to avoid potential overlap of and interaction between policy instruments, which could undermine the effectiveness of carbon pricing mechanisms. The Carbon Pricing Leadership Coalition (CPLC) has detailed information about the need for consistency across policies and measures to mitigate climate change.
Ineffective use of revenues. Carbon pricing instruments can raise significant revenues, but the effectiveness of many carbon pricing initiatives depends on how these revenues are spent. Revenues can be recycled to reduce other conventional taxes, protect lower-income households, support cleaner technologies, address fairness and competitiveness concerns, or channel public funds toward other public policy objectives. But as CPLC explains, each of these approaches has costs as well as benefits, and some are better suited to specific policy environments than others.
Guidance on Carbon Pricing
Substantial guidance on carbon pricing is available. In addition to FASTER Principles for Successful Carbon Pricing, governments, businesses, and other stakeholders can consult the two publications authored or coauthored by the World Bank’s Partnership for Market Readiness (PMR):
- Jointly with the International Carbon Action Partnership (ICAP) PMR published the Emissions Trading in Practice: Handbook on Design and Implementation, a guide for policymakers that distills best practices and key lessons from more than a decade of practical experience with emissions trading worldwide. This handbook is intended to help decision makers, policy practitioners, and stakeholders design and implement a successful ETS. It explains the rationale for an ETS and sets out a 10-step process for designing such a scheme, with each step involving a series of decisions or actions that will shape major features of the policy.
- PMR also published the Carbon Tax Guide: A Handbook for Policy Makers. This guide is offered as a practical tool to help policymakers determine whether a carbon tax is the right instrument to achieve national policy goals. In addition, it is a resource to support the design and implementation of a tax that suits the specific needs, circumstances, and objectives of national policy. The guide provides both conceptual analysis and important practical lessons learned from implementing carbon taxes around the world.
For in-depth literature on carbon pricing, visit the PMR website and the CPLC resource hub.
Carbon Pricing under Article 6 of the Paris Agreement
The success of carbon pricing at national and regional levels has encouraged development of international carbon markets. Article 6 of the Paris Agreement, which outlines a framework to hold global temperature rise to well below 2ºC, includes provisions that would allow countries to cooperate to achieve their Nationally Determined Contributions (NDCs), under Paris Agreement; specifically through carbon pricing to meet mitigation commitments.
Articles 6.2 and 6.3 introduce provisions that allow countries to cooperate with one another to reduce emissions. In other words, country A can transfer its emission reduction to country B, which can then count this reduction toward its NDC. Under this arrangement, existing national and regional instruments can join together to form an international carbon market—one whose large size and greater cost-effectiveness would allow countries to adopt more ambitious goals for emissions reduction.
Article 6.4 establishes a mechanism by which countries both mitigate GHG emissions and contribute to sustainable development. Although its architecture and modalities are still under discussion, the mechanism aims to expand the scope of carbon pricing programs globally by incentivizing mitigation activities by both public and private entities. It too allows for countries to cooperate and transfer emission reductions to other countries for inclusion in the second country’s NDC total, and it, too, seeks to encourage more ambitious goals for emissions reduction.
It is not yet clear how these Article 6 provisions will be put into effect. But once operational, the new mechanisms will help carbon pricing deliver on its potential for cost-effective decarbonization and adaptation. There is substantial pressure to move rapidly toward consensus on the rules that would guide the new mechanisms, given that the Paris Agreement guidelines, including the modalities for operationalizing cooperative approaches to reduce emissions under Article 6, are yet to be finalized in international climate change negotiations at Conference Of Parties (COP26) at Glasgow.
Report of the High-Level Commission on Carbon Prices
Meeting the world’s agreed climate goals in the most cost-effective way while fostering growth requires countries to set a strong carbon price, with the goal of reaching $40-$80 per tonne of CO2 by 2020 and $50-100 per tonne by 2030. That’s the key conclusion of the High-Level Commission on Carbon Prices, led by Nobel Laureate Joseph Stiglitz and Lord Nicholas Stern.
Convened by the Carbon Pricing Leadership Coalition (CPLC) at Marrakesh in 2016 and supported by the Government of France and the World Bank Group, the Commission brought together 13 leading economists from 9 developing and developed countries to identify the range of carbon prices that, together with other supportive policies, would deliver on the Paris climate targets agreed by nearly 200 countries in December 2015.
Prof. Priyadarshi R. Sukla, Co Chair, Intergovermental Panel on Climate Change (IPCC), India, is also a Member of Report of the High-Level Commission on Carbon Prices.
CPLC, World Bank's Interview with The High-Level Commission on Carbon Prices Co-Chairs:
Interview Host :
Ms Camila Perez,
Communication Associate, The World Bank, Washington, DC
1. Prof. Joseph E. Stiglitz, Nobel Laureate, Professor at Columbia University, and Chief Economist of The Roosevelt Institute
2. Prof Nicholas Stern, Kt, PBA, FRS, Chairman of the Grantham Research Institute on Climate
Change and the Environment and Professor, London School of Economics
Carbon Pricing Leadership Report
The Carbon Pricing Leadership Coalition (CPLC) is a voluntary initiative that catalyzes action towards the successful implementation of Carbon Pricing around the world. The CPLC brings together the Leaders from Government, Business, Civil Society and Academia to support Carbon Pricing, share experiences and enhance the global, regional, national and sub-national understanding of carbon pricing implementation in a common platform. The CPLC Secretariat is administered by The World Bank Group.
Climate change is the greatest challenge humanity has encountered, and cannot be addressed by any one jurisdiction, business, or organization. Effective climate action requires jurisdictions, businesses, and organizations across the globe to make a concerted effort to work towards the common goal of limiting atmospheric carbon or greenhouse gas emissions and lessening the effects of climate change. Carbon Pricing is a powerful Policy Tool to align all international stakeholders, towards this common purpose.
To secure the place of Carbon Pricing on the global agenda, the CPLC was launched the opening day of the United Nations Framework Convention on Climate Change (UNFCCC)'s 21st Conference of Parties (COP21) meeting in Paris, France in 2015. As of 2019, the Coalition comprises 34 national and sub-national Governments, 163 Private Sector Organizations from a range of regions and sectors, and 80 Strategic Partners representing NGOs, Business Organizations, and Universities. These partners are actively engaged in the work of the CPLC. In fact, partner-led work has gradually evolved from general support for Carbon Pricing to more targeted initiatives, building on their experiences and lessons learned to-date. The Coalition drives action through knowledge sharing, targeted technical analysis and public-private dialogues that guide successful carbon pricing policy adoption and accelerate implementation.
The CPLC Annual Report 2018-19 provides an update on CPLC’s activities over the year. It also showcases Articles from Thought Leaders to inspire and guide Government and Business Leaders to increase their Carbon Pricing ambition.
This past year, CPLC intensified its Advocacy Role, facilitated New Opportunities for sharing between Carbon Pricing Researchers and Knowledge Experts and responded to key knowledge gaps to strengthen the argument in favor of appropriate Climate Actions through right Carbon Pricing.
