Carbon Pricing Corridors

Leading businesses and investors are now working out how to align themselves with the objectives of the Paris Agreement.

Carbon pricing is emerging as a key mechanism to reduce greenhouse gas (GHG) emissions, which means that private and public stakeholders are seeking an informed view of how carbon-related price signals can drive global emission reductions in line with these goals. In 2017, CDP and the We Mean Business Coalition launched the Carbon Pricing Corridors initiative with the aim of enabling large market players to define the carbon prices needed for industry to meet the Paris Agreement. The inaugural report was published in May 2017, covering the power sector and laying the ground-work for energy-intensive industries.

The Carbon Pricing Corridors initiative aims to provide a valuable benchmark for business and investors who are seeking to make strategic decisions consistent with a low-carbon economy, but who struggle with a lack of information about the risks and opportunities involved in the transition. The initiative can also inform governments who are turning to carbon pricing as a mechanism to achieve their climate goals as well as those seeking to reform existing carbon pricing policies to strengthen market signals.

The initiative’s work complements the recommendations developed by the Task Force on Climate-related Financial Disclosures (TCFD), which outline the need for enhanced stress testing of climate-related risks. The Carbon Pricing Corridors can be used as a tool in scenario analysis, as organizations consider the potential financial, strategic, and business impacts resulting from the Paris Agreement in their decisions.

The Carbon Pricing Corridors Initiative is a panel of 20+ chief executives and senior leaders selected from leading companies, the investment community, and international experts across the G20.

Panel members will respond to a small set of quantitative and qualitative questions. Results will identify and shape an aggregated projection for the range of carbon prices through 2020 to 2035, which will help guide the most polluting industry sectors to set a meaningful and effective trajectory for decarbonizing the economy.

Panel members will be at the forefront of carbon-related change, joining forces with other influential economic actors and experts to advise and advance their own thinking. It is a valuable initiative for companies and investors actively seeking to stay ahead and be instigating members of innovative changes across the global business community.