For the second consecutive year, debate over carbon markets sullied the outcome of global climate change negotiations. COP25 in Madrid began with Article 6 on international mitigation cooperation as the only unfinished section of a rulebook for executing the Paris Agreement, and the wickedest problem on docket. A year of advance work and two weeks of deliberation proved insufficient, and Article 6 will again be front and center at COP26 in Glasgow in 2020. Why is Article 6 so contentious and what are the implications of another failure to resolve it?
The Arab Gulf States – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE –are highly vulnerable to oil price shocks due to their high economic reliance on oil and gas export revenues. Historically, oil price shocks have been a source of pressure on the Arab Gulf States economies. However, only since mid-2014 have oil prices seemed to pressure on political regimes to consider domestic economic reforms and development of alternative sources of income (i.e. economic diversification).
To avoid long-term negative implications – such as increasing total CO2 emissions and deterioration of air quality associated with increasing downstream petrochemical energy intensive industries, fossil fuel subsidy reforms, enhancing energy efficiency and the use of clean energy technologies are indeed instrumental to tackle such issues. In this article, carbon pricing is proposed as a useful instrument to complement the aforementioned tools.
To address the global development risks posed by climate change, a major technological shift leading to a substantial reduction in the global greenhouse gas (GHG) emissions will be necessary. In parallel, the substantial global economic and development distortions - that lead to inequality - do not enable the technological and financial transfers needed for a sustainable and equitable global economy. This brings us to a fundamental question: when climate change only imposes an additional threat of unseen scale, how can we change the economic status-quo?
Statoil has been operating in a market where an external carbon price has existed since the early 1990s. Due to CO2 tax and other regulatory measures the oil and gas industry in Norway has adopted emission-reduction measures corresponding to more than five million tonnes of CO2 per annum since 1996. Consequently, Norwegian oil and gas production is in the global premier division for low GHG emissions and the average amount emitted per unit produced is about half the world average.
The Carbon Pricing Leadership Coalition brings together leaders from government, private sector, academia, and civil society to expand the use of carbon pricing policies.
