3. 3
Global net zero emissions goal would require
$1-2 trillion a year investment
Source: Energy Transition Commission
4. Net Zero: from no where to every where
• 823 cities and
101 regions
• 11% of global
population
• >6.5Gt of GHG
Source: Next Climate Institute
Source: Energy & Climate Intelligence Unit and Oxford Net Zero
5. NDCs and Net Zero Commitments
Sources: * Energy and Climate Intelligence Unit ** UNFCCC
• Current NDCs if
implemented would yield a
1% reduction of global
emissions
• 45% reduction in emissions
is needed by 2030 to limit
temperature increases to
1.5 degrees Celsius
6. Long Term Strategies and Carbon Pricing
.
• 28 countries, including the EU have submitted their LTS
• Of these 26 include carbon pricing in the mix of measures to implement their LTS
2050 LTS CPIs
7. 7
Corporates are leading the way, but requires clarity
• 1,541 companies
• $11.4 trillion
revenues
• 3.5 Gt of GHG
emissions
Source: S&P Global
9. 9
Carbon prices create an incentive for corporate
entities and citizens to reduce carbon emissions.
Avoid Reduce
Invest Innovate
“A well-designed carbon price is an indispensable part
of a strategy for reducing emissions in an efficient
way” (Stiglitz, Stern et al., 2018).
Carbon
pricing
10. CPLC Task Force on Net Zero Goals and Carbon Pricing
-All countries, sectors and companies need to reduce emissions as quickly as possible, not only
where reductions are least cost, but different countries will move at different paces
-The next 10 – 15 years will be critical for the transition to net zero
Robust strategies and clear short and medium-term targets are needed to identify and
prioritize specific sectoral and technological transformations to reach net zero, and to drive
immediate action and investments.
Governments and the private sector should adopt separate emission reduction and removal
targets for accountability of efforts, particularly around emission abatement
Net zero strategies must support and balance multiple policy goals – economic growth, jobs,
access to energy, poverty eradication, protection of vulnerable communities and ecosystems,
and economic and environmental resiliency.
In particular, decisions regarding the role of land-based removals should be grounded in a
broader policy context and the principle of informed consent to enable appropriate
consideration of the benefits and trade-offs
11. Carbon Pricing and Net Zero
- Carbon pricing is a powerful tool that should be included as part of a broader arsenal of policies to
achieve net zero, but is not a silver bullet
◦ Complementary policies for sectors that are not price responsive or where emission abatement or removal
technologies are not readily available.
◦ Complementary policies for targeted use of carbon pricing revenue in transformational challenges
◦ Use o internal carbon pricing
- Several factors will influence whether carbon pricing achieves its
full potential in the transition to net zero
◦ Carbon prices will need to be much higher
◦ Carbon pricing should be expanded its scope
◦ Emergence of a global price
Source: Ecosystem market place
12. Carbon Pricing and Net Zero
- International carbon credit markets must support an increase in ambition by both buyers and sellers
◦ Buyers should reduce their own emissions before investing in removals elsewhere
◦ Focus on transformative emission reduction and removals that support low carbon development and protect local
environments, support human rights, and have buy-in from impacted and vulnerable communities.
◦ Conform with Article 6 rules, once adopted, to ensure no double-counting.
- Choices regarding investments in emission reduction and removal activities must align with long-term strategies
and the transition to net zero globally.
◦ Availability of emission avoidance and reduction credits must n decrease over time
◦ Reliance on land-based emission reduction and removal credits in the near term
◦ Investments in emission reductions and technological removals in the long term
◦ Companies need to abate value-chain emissions to attain net-zero
The emerging concept of ‘mitigation contributions’ as an alternative to credits could help align private sector
efforts with global ambition.
◦ A mitigation contribution would represent an investment in emissions reductions or removals outside a company’s
value chain, but would not result in the transfer of a credit that could be netted against a company’s emission
13. Areas for further work
Further work is needed to align the efforts of governments and the private sector with the level of ambition required to
reach net zero globally and to enable transparent comparison of claims
Important knowledge gaps remain
comparable metrics and transparency standards around net zero targets and trajectories for governments and the
private sector, to hold them to account.
governance and standardization of voluntary carbon markets and compatibility with increasingly important
compliance markets.
Better understanding the role of removals and limitations of removal capacity and the technical opportunities and
costs for emission reductions and removals.
safeguards for natural removals to ensure they contribute to enhanced ambition, reduce the risk of non-permanence or
leakage, and promote equity
Government capacities to define net zero targets, assess their ambition, identify policy toolkit and strategies to met
those targets
14. Conclusion
Significant potential to use carbon pricing instruments in the policy mix with supported
investments
Countries need to assess the opportunities in using different CPIs, their political economy and
societal acceptance
Markets can provide flexibility in the transition, serve as conduits for finance and investment
and offer opportunities to enhance ambition.
Developing countries need to assess market engagement, understanding risks and
opportunities and trade-offs with key developmental priorities
More work is needed to elaborate on key aspects relating to accountability, safeguards for
use of removals and alignment of goals and strategies across stakeholder groups.
More attention to the pathway to zero and the range of strategies including communication
and disclosure strategies needed to navigate the way to decarbonization
192 have submitted their first NDC
88 have updated their first NDC
Only 8 have submitted their second NDCs
Governments recognize that carbon pricing is a critical tool in the policy mix to enable a LTS to net zero.
All the countries that submitted LTS have a CPI instrument in place (exception for the US, which is going for a federal approach).