Putting a price on carbon: Building the foundation for a greener economy


Opening remarks by Angel Gurría

Secretary-General, OECD

COP21 Business Dialogue: Lunch session

10 June 2016

Elysée Palace, France

Monsieur le Président, Messieurs, Mesdames les Ministres, chers collègues et amis,

Permettez-moi tout d’abord d’exprimer de nouveau toutes mes félicitations à la France pour l’accord sur le climat obtenu à la COP21. Il s'agit bien là d'un accord historique qui va pour sûr influencer l’avenir de notre planète. Je suis particulièrement fier que l’OCDE ait pu contribuer à cette étape décisive !

Nous devons maintenant nous appuyer sur cette dynamique créée à Paris pour construire la COP22 au Maroc. Monsieur le Ministre Mezouar, l'OCDE est ravie de vous apporter son soutien dans les mois qui viennent pour y parvenir.

Un système effectif de prix du carbone sera primordial pour nous mettre sur la trajectoire d'un futur bas carbone. L'OCDE s'est battue depuis longtemps pour un prix du carbone élevé, crédible et prévisible qui reste un rouage essentiel d'une réduction efficace des réductions.

Let me begin with some good news. As of the end of 2015, about 40 countries and over 20 cities, states and regions were putting a price on carbon, covering around 12% of global emissions. More jurisdictions have announced their plans to join the carbon pricing club in 2016, including Chile and Ontario in Canada. These carbon pricing pioneers deserve our congratulations and our praise.

Increasingly, companies are also playing their part. In 2015, the use of internal carbon pricing had tripled since the previous year!

We’re moving in the right direction, but we are not there yet. We see a tiny trickle of transformation, when what we need is a sea-change. After more than 20 years of climate policy discussions, in OECD and in BRIICS countries, 60% of CO2 emissions come from fossil fuels are still not priced at all – that is, they carry no energy tax or carbon price whatsoever.

Fortunately, the drop in fossil fuel prices means that conditions for making serious progress towards effective carbon pricing have never been better. Governments must seize this moment and start ramping up carbon prices on fossil fuels.

But unless governments simultaneously eliminate fossil fuel subsidies, the impact of carbon prices will be seriously undermined. Fossil fuel subsidies act as a negative price on carbon, encourage the use of fossil fuels, and come at a high cost to tax payers. Our work shows that fossil fuel subsidies have cost taxpayers in OECD and BRIICS countries between USD 160-200 billion annually over recent years.

The scale of the challenge is such that we cannot rely on one solution: we must employ the whole policy toolkit! Our report, Aligning policies for a low-carbon economy, prepared for the COP21, gives a first diagnosis of the many policy misalignments between climate objectives and other policy domains. These must be addressed!

Going forward, the OECD will continue to improve the evidence base for carbon pricing, and will support governments with the data and policy advice to help them transition towards a low-carbon future. We will soon launch a Centre for Green Finance, which will leverage the OECD’s expertise and data on climate finance and investment.

Ladies and gentlemen,

We are late – but we are not yet out of time. We must act now with comprehensive climate policies, and the whole business sector needs to be on board with greening our economy. Effective carbon pricing is a building block for better policies across all domains, putting us on the path towards a better climate, for better lives.

Thank you.