Martin Wolf rightly points out the importance of carbon pricing in the fight against global warming, focusing on what is happening in the UK (Opinion, May 5).
It is a fact that after the great financial crisis, when the price of carbon in the EU’s emissions trading system collapsed, the UK as part of this market decided to put an additional levy on carbon emissions in order to sustain its price. The decision greatly helped in phasing out coal and improving the UK’s performance.
The EU is now fully aware of the price of carbon as a powerful incentive to decarbonise. Over the past two years, despite the Covid-19 crisis which reduced the pressure on energy markets and therefore on the price of carbon, the price has continued to rise and is now approaching €50 per tonne.
It is not inconceivable now to foresee a price of carbon in the EU at €100 per tonne in 2030. More and more firms, including in the energy sector, have introduced in their strategic planning an internal price of carbon of €100, a level for 2030 market participants are starting to take seriously.
The EU plans to put in place a carbon border adjustment mechanism which, in my view, should be sectoral with global agreements.
This would be in the spirit of the Montreal Protocol, the landmark multilateral environmental agreement that regulates the production and consumption of nearly 100 man-made chemicals referred to as ozone-depleting substances. It would create level playing fields for each of the main polluting industries. There would be huge benefits for the UK to participate in this move.
More and more countries, including China, are moving towards carbon pricing. The Glasgow COP26, which the UK government will chair, is the right forum to push the idea of introducing carbon pricing in the Paris COP21 agreement.
Edmond Alphandéry
Former Finance Minister of France
Chairman, Task Force on Carbon Pricing in Europe, Paris, France