16 January, 2017: The world’s first industry-led initiative aimed at defining the carbon prices needed for the power sector to meet the Paris Agreement launched today on the eve of the World Economic Forum’s annual meeting in Davos.
The global environmental non-profit CDP, on behalf of the We Mean Business coalition, is convening a panel of utilities and investment leaders from across the G20 under the Carbon Pricing Corridors initiative.
The industry experts will, over the next two years, shape realistic prognoses of the range of investment-grade carbon prices needed to decarbonize electricity generation through 2020, 2025 and 2030. During the course of 2017 the initiative will expand its scope beyond the power sector to include other high-emitting sectors.
The power sector must peak its greenhouse gas emissions by 2020, and subsequently bring these emissions down to zero by 2050 in most G20 countries if we are to limit global temperature rises to below 2°C 1.
“Carbon pricing is too important to leave in the realm of economic debate,” says CDP’s chief executive officer Paul Simpson. “This is why CDP, on behalf of We Mean Business, is bringing industry leaders – the people who make the decisions day in and day out that shape our power sector – to the table to help embed carbon pricing in our real economy. Their work will give investors, companies and policymakers the clear, credible price signals that are needed to make large enough investments in clean energy and drive the required emissions reductions.”
This initiative comes at a critical moment where there is increasing focus from the financial community on the tangible links between climate risk and corporate balance sheets. The recently published recommendations from the Task Force on Climate-related Disclosure, established by Mark Carney and chaired by Michael Bloomberg, point to the clear need for investors to be able to stress test their portfolios against a below 2°C scenario.
“Investors have to rely on a wide range of complex carbon-related signals to stress-test their portfolios, making the job of meeting the Paris Agreement incredibly difficult. Current carbon-based price signals in the wider economy are also too low to attract the low-carbon investments needed,” comments Nikki Bartlett, CDP’s director of carbon pricing. “Our goal is to make the job as easy as possible for investors by giving them investment-grade price ranges. The added bonus is that it will help to strengthen and guide future carbon pricing policy.”
The initiative, which includes the chief executives and senior leaders from PGGM, Engie, Bank of America, Iberdrola, YesBank and Hermes Fund Managers among its first members, is due to report on its initial projections for credible carbon price ranges in Spring 2017.
1 Based on analysis from the International Energy Association’s Energy Technology Perspectives, 2016
CDP’s chief executive officer Paul Simpson is attending Davos and is available for interviews.
For media information and interviews please contact Ashleigh Lezard on [email protected] +44 7920 510065
NOTES TO EDITORS
Scope and process of the Carbon Pricing Corridor initiative
The Carbon Pricing Corridor will develop an iterative scenario building process that relies on the opinion of a panel of experts. Influential economic actors and experts will apply their knowledge in the areas of energy investments (and in time high emitting and industrial sectors) and consider relevant research and developments to arrive at a view on what range of carbon prices is necessary to shift to a decarbonized global economy well-before the end of the century.
Expert opinions will be obtained via a process of inquiry, asking panel members to respond to a small set of quantitative and qualitative questions. Results will be collected and analyzed to determine an aggregated projection for the range (corridor) of carbon prices, over time, that will likely enable us to meet the emissions reduction goals outlined by the Paris Agreement. The process will result in a biannual publication, the first of which will be published in January 2017.
The focus of the first inquiry process and subsequent publication will be on the power sector in order to determine a carbon pricing corridor that enables a transformation in energy supply.
Initially, the project will focus on G20 or a sub-set of G20 countries and will look at the price signals needed for 2020; 2025 and 2030 timeframes.
Current panel members include:
- Abyd Karmali, Managing Director of Climate Finance, Bank of America Merrill Lynch
- Andre Dorf, CEO, CPFL
- Else Bos, CEO, PGGM
- Feike Sijbesma, CEO, Royal DSM
- Gerald Cartigny, Member of the Managing Board, CIO, MN
- Gérard Mestrallet, Chairman, Engie
- Jeroen De Haas, CEO, Eneco
- Jose Ignacio Sanchez Galan, CEO, Iberdrola SA
- Jose Manuel Entrecanales Domecq, CEO, Acciona
- Mats Andersson, Former CEO, AP4
- Michael Grubb, Professorial Research Associate, Bartlett School Env, Energy & Resources, Institute of Sustainable Resources UCL
- Philippe Joubert, Chair, The Global Electricity Initiative
- Rana Kapoor, CEO, YesBank
- Ross Rolfe, CEO, Infigen Energy
- Saker Nusseibeh, CEO, Hermes Investment Management
CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 5,800 companies with some 60% of global market capitalization disclosed environmental data through CDP in 2016. This is in addition to the over 500 cities and 100 states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP, formerly Carbon Disclosure Project, is a founding member of the We Mean Business Coalition. Follow us @CDP to find out more.