More Than Two Thirds Of Latin American And Caribbean Nations’ Climate Action Plans Refer To A Price
This was the key conclusion of the three-day Latin American and Caribbean Carbon Forum in Panama which is wrapping up today, attended by around 700 government delegates and private sector experts from 47 countries.
According to the World Bank, more than two thirds of all Latin American and Caribbean nations’ climate action plans refer to the use of carbon pricing mechanisms in order to achieve the key objective of the historic Paris Climate Change Agreement, which is to limit the global average temperature rise to as close as possible to 1.5 degrees Celsius, thereby avoiding the worst impacts of climate change.
Daniele Violetti, chief of staff of the UN Framework Convention on Climate Change said: “As we stand on the threshold to the early entry into force and ensuing implementation of the Paris Agreement, governments and the private sector meeting here in Panama have been very clear that their future development trajectory must be low carbon and sustainable. The many examples of the shift to low carbon discussed at this meeting are hugely encouraging ahead of the UN Climate Change conference in Marrakech in November, where governments at all level, civil society and the business community will continue to accelerate the action required to green their economies.”
At the carbon forum, the Vice-President of Panama Isabel St. Malo announced that Panama is preparing a national carbon market, with the aim of helping the country and the entire region to develop sustainably and to achieve the objectives of its climate action plan under the Paris Agreement.
“14 Latin American and Caribbean countries were amongst the very first to ratify the Paris Agreement. We recognize that we are both part of the climate problem and part of the climate solution, and want to be climate leaders,” she said.
Ms. St. Malo said that Panama plans to become a carbon hub for the region, facilitating collaboration between public and private actors in the fight against deforestation, whilst promoting a culture of sustainable forest management and trade in international emission reductions.
Some examples of regional progress on markets highlighted at the meeting.
Mexico preparing to launch a 12-month pilot cap and trade scheme in November ahead of an expected full rollout of a national carbon market in 2018. Much of Mexico’s carbon market experience to date has come from its participation in the Clean Development Mechanism (CDM), one of the market-based mechanisms included in the Kyoto Protocol.
The number of major companies in Brazil preparing for a national price on carbon rose 74% within a year, according to a study by UK-based carbon disclosure analysts CDP.
Chile reported on its implementation of carbon pricing and interest in joining other countries in a regional carbon market.
Across the Latin American and Caribbean region, there is potential for more market participation, especially with agriculture and forestry-based instruments.
Several countries, including Colombia, Brazil, Chile, Mexico and Peru have all identified significant investment opportunities in renewable energy, and are now exploring how carbon markets can be engaged to support such investments
According to the International Finance Corporation, Latin America and the Caribbean are likely to see USD 1 trillion of clean energy investment opportunities by 2040, of which USD 600bn are expected to materialize by 2030.
As part of the Forum, government representatives from across the region also came together under the Nairobi Framework Partnership with UN organizations, development banks and other international organizations to develop joint projects to support implementation of their national climate action plans under the Paris Agreement.
Dirk Forrister, President & CEO, International Emissions Trading Association (IETA) said: “It’s terrific to see the increase in business awareness of the opportunities for climate investment at this year’s Forum. The Paris Agreement sets bold ambitions to curb global warming, and it offers new opportunities for business cooperation through carbon markets. That’s why businesses across Panama and throughout the Latin America and Caribbean region are wise to explore the new opportunities of Paris and also how to rise to the challenges.”
In addition, there was a strong interest from regional policy makers to advance the development of cooperative approaches and a new market mechanism under the Paris Agreement’s “Article 6” provisions, with many of the debates and discussions at the Forum focused on how planned and existing projects and opportunities to curb emissions can be taken forward under the Paris Agreement.
Article 6 of the Paris Agreement sets out three economic instruments: transferring mitigation outcomes, essentially emissions trading schemes; designing a new Sustainable Development Mechanism, which would incentivize the private sector to develop emissions reduction and development projects; and setting a framework for non-market approaches, such as green bonds and carbon taxes.