Source · Select Committees · Foreign Affairs Committee
Recommendation 11
11
COP26 must aim to secure a form of realistic pricing of carbon output that prevents...
Conclusion
COP26 must aim to secure a form of realistic pricing of carbon output that prevents carbon offshoring and fully prices in the cost of the production of goods and transport. Building on the G7 and G20 to ensure the burden is carried by the commissioning country, and to incentivise change in producing nations, will change a simple equation based on the cost of energy to one based on the cost to the planet. The UK’s financial services sector, and particularly its insurance industry, is well placed to understand these costs. Using new forms of finance to look at cost-sharing based on innovative ledgers would provide an opportunity to realise the impact and share the reward of growth, while encouraging cross-industry and jurisdictional cooperation on climate targets. (Paragraph 30) Covid-19
Government Response
Acknowledged
HM Government
Acknowledged
11.1 As the world transitions to net zero, it is important we ensure that ambitious climate policy interventions do not lead to carbon leakage. Carbon pricing is not a mandated discussion for COP26, and so will not be an outcome, but we acknowledge the risk of carbon leakage to decarbonisation goals, and the potential impact it could have on those countries that have adopted rigorous approaches to reduce carbon emissions, and agree that countries should work collaboratively to address this risk. 11.2 Carbon leakage is caused by different countries mitigating emissions at different rates. So, we support an international, multilateral response. In the G7 Finance Ministers & Central Bank Governors communiqué, issued after the London meeting on 4–5 June, we committed to a multi-year effort to deliver the significant structural change needed to meet our net zero commitments and environment objectives in a way that is positive for jobs, growth, competitiveness and fairness. As part of this, they committed to properly embed climate change and biodiversity loss considerations into economic and financial decision-making, including the optimal use of the range of policy levers to price carbon. The UK G7 Presidency will continue to work with our international partners to follow through on the need to increase the use of the range of policy levers to price carbon. Covid-19