Time for Boldness

A global carbon price is needed to help control emissions, promote sustainable development and build green economies.
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Sending price signals…is an essential step to fully internalizing the external costs of global warming.
By December, more than 180 countries representing 97 per cent of global emissions had submitted their Intended Nationally Determined Contributions (INDCs).

The evidence is irrefutable: the climate is changing, generating a range of environmental, social and economic problems. Without a doubt, climate change is the greatest challenge humanity has ever faced. The broad consensus is that the cause is human activity, and specifically how we fuel our economies. We have become, ironically, our own worst enemies. Put simply, our current consumption and production patterns are unsustainable, and the consequences will be felt by our children and grandchildren. Urgent action is needed.

Climate change could not be more complex, and undoubtedly involves multiple issues. Chile is an example of this: we are socially, economically and environmentally vulnerable to its effects. Moreover, we are acutely aware that climate change is a factor in deepening inequities at the local, national and international levels. For this reason, it is our obligation to address this problem before its consequences are irreversible.

Chile is not a significant contributor to global emissions of greenhouse gases (GHG): we account for little more than 0.26 per cent of the global total. However, we recognize our role as a global citizen, and our responsibility not only with more vulnerable communities but with future generations. It is time to acknowledge that only together will we be able to face the greatest environmental, economic and social threat that humanity has faced in its history. It is time to be bold.

At last we observed some audacity in the COP in Paris in 2015. The commitment for climate action was global: 195 countries supported the Paris Agreement. By December, more than 180 countries representing 97 per cent of global emissions had submitted their Intended Nationally Determined Contributions (INDCs). Chile´s INDC is adequate, consistent, evidence-based and built through a participatory process. On mitigation, we propose to further reduce the carbon intensity of our economy by 2030. In addition we propose targeted action in the forestry sector.

However, while nation-states must submit and implement their own contributions, we are confident that more active climate action is possible with the right global instruments. For this reason, Chile is actively participating in the Carbon Pricing Leadership Coalition. This brings together leaders from across government, the private sector and civil society committed to advance the carbon pricing agenda by working with each other towards the long-term objective of a carbon price applied throughout the global economy.

While we do not believe that market instruments are the only way forward, we are convinced that sending price signals to public and private agents is an essential step to fully internalizing the external costs of global warming. Carbon pricing remains controversial, but it can be an efficient and effective mechanism for controlling emissions and recognizing the differentiated impacts of national contributions to them.

Global problems require global solutions and a worldwide price for carbon may be the step that generates both the appropriate market signal for emissions reduction and the necessary funds to support technological change in the energy sector and climate change adaptation in less developed countries. We therefore call for the implementation of a global carbon price as part of the international agenda to face climate change.

Chile has advanced in this area. In 2014, Chile adopted the first CO2 tax in South America. This stands at US$5 per ton of CO2 emissions, for turbines and boilers, and therefore essentially affects the electricity generation sector. The tax will be implemented in 2017, thus making Chile a pioneer in the use of economic instruments in environmental policy – and specifically climate change mitigation – in Latin America.

Environmental taxes are recognized as a central tool in environmental management, and serve to deliver appropriate market signals and modify harmful behaviour. Implementing green taxes is a major step in environmental policy in our country, since it will allow productive agents to internalize the negative externalities of their processes, improve environmental conditions, and reduce greenhouse gas emissions.

We invite all countries to make similar gestures. In the medium term we envisage implementing global mechanisms that recognize the externalities associated with greenhouse gas emissions. We are convinced that this is the road forward.

We face the greatest challenge of collective action that mankind has known and our generation has the unique opportunity to find the solution. The implications of climate change go far beyond environmental issues; they are also political, economic and social. Chile has taken the challenge and is actively implementing a range of initiatives to respond to its commitments. We know that we cannot do this alone; we need the participation and collaboration of the private sector and the international community.

We are optimistic that a global effort, building on the commitments in Paris, but going further will allow us to advance towards a more equitable society and a more sustainable planet.