The World Bank is working to overcome poorer nations’ suspicions about putting a price on carbon emissions as it seeks to expand greenhouse-gas trading internationally, according to the lender’s special climate-change envoy.
While charging for carbon is seen by developed countries as a way to fund emissions cuts, some less-rich nations want direct aid to combat climate change, Rachel Kyte said in an interview. The preference comes amid uneven rewards to developing economies from the United Nations’ carbon market, where 80 percent of its emission credits have gone to three countries, UN data show.
“For some audiences you emphasize the opportunity, for some audiences you emphasize the risk” of climate change, Kyte said May 26 in Barcelona. “Markets have been regarded historically with some suspicion. Institutions that have supported market-based solutions have been regarded with some suspicion.”
The heads of Europe’s largest oil and natural gas companies joined together on Monday for the first time to call for governments to agree on carbon pricing at a UN climate summit in December. The same day, Venezuela told UN climate negotiators in Bonn that markets have “nothing to do with climate justice” because too few nations benefit from them. It was speaking on behalf of Cuba, Bolivia, Dominica, Ecuador and Nicaragua.
The World Bank favors carbon pricing as it’s seen as less of an economic burden than more-expensive renewable-energy subsidies, Kyte said. The bank started the Prototype Carbon Fund in 1999 and now oversees a $127 million plan to prepare developing nations for charging mechanisms, such as emissions markets and taxes.
Rich nations’ encouragement of markets is “unbalanced,” and shifting responsibility for global warming to poorer nations “cannot be the ultimate objective,” the Group of 77 developing countries and China said at the 2013 climate talks in Warsaw.
Since then, developed nations have started publishing post-2020 emission-reduction plans and promised more than $10 billion to the Green Climate Fund for poorer countries. China is planning a national carbon market for 2017.
Poorer nations “are going to want to know that they are going to be better taken care of than perhaps in the past,” Kyte said. Too much development aid was flowing to too few countries, she said, without specifying which nations are skeptical about carbon pricing.
The value of global carbon permits expanded 6.3 percent to $34 billion in the past year, the bank said last week. There’s potential for $415 billion of carbon-reduction investments in developing nations under the UN’s Clean Development Mechanism market, according to UN data published Monday.
The World Bank has embarked since March 2013 on a program intended to make climate actions from different nations more comparable. It would allow rating companies to assess carbon markets and policies that create emission reductions, responding to the wide variety of efforts.
Networked carbon markets would allow developing nations to create an emission-reduction asset using a market or a policy program, get it rated and potentially sell it to a nation needing to make up for higher-than-expected greenhouse-gas output, according to a document on the World Bank website.