Climate change cannot be abated without effective carbon pricing

(Eco Business, 9 Apr 2021) The full potential of the private sector needs to be unleashed to raise the capital needed to fight climate change. This can only be done if carbon is priced high enough to establish the business case for decarbonisation, writes Georg Kell.

More and more countries, already representing about 70 per cent of the world economy, are setting climate neutrality targets. Hundreds of corporations, including the largest emitters of greenhouse gases, have pledged to become “net zero” by 2050 or earlier, and over 1,000 corporations have embraced science-based targets to measure carbon reductions.

This outburst of public declarations and pledges signifies a promising new alignment of ambitions to face the climate crisis. But declarations of good intentions by themselves are not going to lead to the required timely actions. In fact, despite the growing popularity of voluntary commitments, especially since the Paris Agreement of 2015, average carbon dioxide (CO2) levels in the atmospheres have kept growing. They exceeded 410 parts per million in 2019 and kept rising in 2020 despite the Covid-19 lockdown, reaching a new record of 416 parts per million in February 2021.

Mitigating climate change is largely about accelerating the transformation of the energy systems that power and sustain our modern lives. The burning of fossil fuels accounts for about 80 per cent of the emissions that cause global warming. Growing the share of renewable sources of energy for producing electricity, electrifying all segments of the economy and employing low carbon technologies is possible in principle.

This article has been written in cooperation with Jouni Keronen, chief executive officer of the Climate Leadership Coalition

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Eco Business, 9 Apr 2021: Climate change cannot be abated without effective carbon pricing