Daily Management Review

Carbon Pricing Recognized For The First Time By G20 As A Climate Change Tool


Carbon Pricing Recognized For The First Time By G20 As A Climate Change Tool
For the first time, finance chiefs of the G20 group of nations formally acknowledged the role of carbon pricing to be a potential tool policy measure to address climate change, according to a communiqué published by the body. Analysts said this was a tentative step taken by the G20 toward pushing the concept and for need for having a coordinated carbon reduction policies.
This stance of the G20 is a dramatic shift of the body compared to the last four years with the former administration of the United States president Donald Trump regularly opposing the mention of climate change as a global risk to be included in such international statements.
This statement was issued by the G20 countries following a meeting of the finance ministers and central bank governors of the countries in the Italian city of Venice – a city which itself is under threat due to rising sea levels, and the joint statement included a mention of the idea of carbon pricing along with a "wide set of tools" which should be considered by countries and a coordinated policy be developed to lower greenhouse gas emissions.
Some of the tools mentioned in the G20 communiqué included making investments for development of sustainable infrastructure and new technologies that promotes and fosters decarbonization and clean energy, "including the rationalisation and phasing-out of inefficient fossil fuel subsidies that encourage wasteful consumption and, if appropriate, the use of carbon pricing mechanisms and incentives, while providing targeted support for the poorest and the most vulnerable," said the communiqué from the financial leaders of the world's 20 major economies.
It is worth mentioning that the European Union is scheduled to make public its controversial carbon-adjustment border tax to that it wants to impose on goods that are imported from countries that have high carbon emissions.
"It is the first time in a G20 communiqué you could have these two words 'carbon pricing' being introduced as a solution for the fight against climate change," French Finance Minister Bruno Le Maire told reporters. "We have been pushing very hard to have these two words ... introduced into a G20 communiqué."
During the larger tenure of Trump Presidency, such efforts met strong resistance from the United States with Trump even pulling the country out of the 2015 Paris climate agreement.
The mention of carbon pricing in the G20 communiqué reflects the influence of the Biden administration. Under Biden as the US president, the country had joined the Paris agreement as soon as he took over office in January last year. the Biden administration has also set out ambitious carbon reduction targets and clean energy and transportation investment plans.
However, in order to avoid trade frictions, the US Treasury Secretary Janet Yellen also stressed at the meeting on developing better international coordination on carbon reduction policies even while the US supported emissions reductions.