Countries need to put a price on carbon to help the world cut greenhouse gas emissions and limit climate warming to agreed targets, the head of Europe’s biggest utility said on Tuesday.
“Please put a price on carbon,” Enel (ENEI.MI) Chief Executive Francesco Starace said in an interview at the Reuters Impact conference.
Starace’s comments come less than four weeks before the U.N. COP26 climate talks in Scotland that aim to secure bolder action from the nearly 200 countries that signed the 2015 Paris Agreement to try to limit global warming to 1.5 Celsius.
He said the world was on track to overshoot 1.5C at the moment and it was important to see if larger economies, with their new and more focused efforts, would engage with the target at the COP26 talks, which start on Oct. 31.
“Put the price on carbon in your own territory … and then worry about how that carbon price relates to the other carbon prices,” Starace said. “But price it – because if you start with that then this will finally adjust.”
Carbon pricing is seen by many as key to encouraging emissions reductions and helping new, low-carbon technologies compete with established, more-polluting sources of energy.
A report by the World Bank in May said only a fifth of the world’s emissions were covered by a carbon price – and most of the prices were too low to achieve only a 2C increase in global temperatures, let alone 1.5C. read more
‘SYSTEM DOESN’T WORK’
Ahead of COP26, global business leaders and politicians are taking part in the Reuters Impact conference to discuss efforts to mitigate climate change and drive sustainable growth.
Starace said the energy transition was a front-loaded process that required companies to invest now for benefits in the long term.
But he said consumers still worked on a very short-term horizon, with governments tending to take a hands-off approach and trusting markets to adjust.
“That can’t be any more the case. We need to bring consumers into the story,” he said.
Starace said consumers needed to see the benefits of low-cost energy now by using long-term pricing deals.
He said governments and banks needed to adjust to this long-term horizon and implement the right regulations and policies so the market could adapt properly – and avoid the wild swings in energy prices that have plagued markets in recent weeks.
“The fluctuations and surprises we observe today are exactly a demonstration of this – they are short-term convulsions of a system that doesn’t work anymore.”
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This article was shared by Reuters.