World Bank, IMF, and Heads of State Urge Treaty on Climate Change

As talks begin this week in Paris, strong rhetoric has already erupted in favor of policies designed to combat climate change. Six heads of state and the leadership of the World Bank Group and the International Monetary Fund (IMF) led the way with calls for support from corporations and governments. These individuals want to put a price on carbon as a means of simplifying the process for investing in cleaner technologies and ensuring a greener future.

As talks begin this week in Paris, strong rhetoric has already erupted in favor of policies designed to combat climate change. Six heads of state and the leadership of the World Bank Group and the International Monetary Fund (IMF) led the way with calls for support from corporations and governments. These individuals want to put a price on carbon as a means of simplifying the process for investing in cleaner technologies and ensuring a greener future.

In a fairly unusual show of unity, this coalition has called upon the countries and businesses of the world to start creating a system for quantifying and pricing carbon pollution. This group sees this practice as the key to preventing further climate change in the future, reversing the damage already done, and transforming the global economy into one that can remain ecologically and financially viable. Leaders involved in this plea include the heads of state of France, Chile, Ethiopia, Germany, Mexico, and Canada.

According to President François Hollande of France, “The goal is to gradually set a sufficiently high carbon price around the world to encourage better behaviour … In France, the Energy Transition Act has already made provision for a substantial increase in the price of carbon, to €22 per metric tonne next year and a projected €100 by 2030. In Europe, we will also improve our carbon market while ensuring that the most compliant countries remain competitive. Very quickly, a company consuming less CO2 should gain a decisive competitive advantage.”

Surprisingly, other financial ministers and CEOs around the world have answered the call put forth by this group of national leaders. For example, according to Carbon Pricing Limited, today in Paris (at a separate event), the Carbon Pricing Leadership Coalition (CPLC) had its inaugural meeting.

The CPLC brings together key governments (such as Mexico, Germany, France, and Chile) and nearly 90 global businesses and NGOs. Members of the CPLC have agreed to a course of action that should advance carbon pricing. They would achieve this through the collection and sharing of evidence derived from successful carbon pricing policy.

Moreover, the CPLC wants to obtain the support of businesses to achieve even more ambitious change by using the private sector to push the reforms rather than laws. It, too, supports the use of carbon pricing as a means of combating climate change.

In addition to the world leaders calling for reforms to prevent climate change, the World Bank and IMF also weighed in on the issue. “We are seeing increasing momentum from heads of state and other global leaders to put a price on carbon pollution, but more action is needed to cut harmful polluting emissions … These statements of support from leaders today are critically important, as is the work of Carbon Pricing Leadership Coalition.

We must ensure that this momentum for carbon pricing translates into impact on the ground,” said President of the World Bank Group, Jim Yong Kim.

IMF Managing Director Christine Lagarde said, “A successful outcome to the Paris climate talks will send a powerful message that nations can work together for the good of the planet … The right carbon price should be at the center of this effort. Indeed, given the slump in energy prices, there has never been a better time to transition to smart, credible and effective carbon pricing. Policy makers need to price it right, tax it smart, and do it now.”