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Discussing carbon pricing at the UN climate change conference


Madrid, December 9, 2019

Last year the 24th session of the Conference of the Parties (COP24) closed in Poland with a climate package that lay out some important guidelines for the implementation of the Paris Agreement, and a special report by the Intergovernmental Panel on Climate Change (IPPC) on the impacts of global warming of 1.5 °C above pre-industrial levels.

This year the United Nations Framework Convention on Climate Change (UNFCCC) organized COP 25 in Madrid (December 2-13), under the Presidency of the Government of Chile and with logistical support from the Government of Spain. On December 9, as the conference started its second and decisive week with the arrival of the Ministerial delegations, the Harvard Project on Climate Agreements and Enel Foundation hosted an official side event, in collaboration with the China-based Tsinghua University Global Climate Change Institute.

The panel focused on how to reduce greenhouse emissions through carbon pricing, giving some attention to experience and prospects in EU, South America, and to China’s emerging national systems. The discussion aimed to review recent research, analysis and experience on carbon pricing and used as starting point a background paper written by Prof. Robert N. Stavins, Director of the Harvard Project on Climate Agreements and A.J. Meyer Professor of Energy and Economic Development at Harvard Kennedy School and supported by Enel Foundation, on the theory and practice of carbon taxes and cap-and-trade mechanism.

Professor Stavins moderated the discussion involving high-level academic and public sector representatives such as Joseph Aldy, Professor of the Practice of Public Policy at Harvard Kennedy School and a former Special Advisor to the President of the United States for Climate Change and Energy, Zhang Xiliang, Director of the Global Climate Change Institute at Tsinghua University, and Raffaele Mauro Petriccione, Director-General of DG Climate Action within the European Commission. The private sector’s view was represented by Daniele Agostini, Head of Energy and Low Carbon Policies at Enel Group, and Claudio Seebach, Member of the Advisory Commission to the President of Chile on COP25 and Executive Chairman of the Association of electricity Generators from Chile.

Commenting on the event, Professor Robert Stavins declared, “We are pleased to have co-sponsored this important event with the Enel Foundation. Carbon pricing is an essential policy tool for addressing climate change, and in this panel we explored policy design, criteria for policy choice (in part between carbon taxes and cap and trade), and recent experience with carbon pricing. We look forward to advancing these discussions in the coming months.”

In parallel, Giuseppe Montesano, Deputy Director at Enel Foundation commented, “This side event discussed recent research on carbon pricing that both Harvard and Enel Foundation have undertaken over the past years. We believe that carbon pricing is an effective instrument to enhance climate action and research can help make it feasible in different jurisdictions.”

Daniele Agostini, Enel’s Head of Energy and Low Carbon Policies, added, “The Enel Foundation-Harvard research is once more right on the spot.  Hybrid carbon pricing mechanisms have made obsolete the dichotomy between carbon tax and cap and trade. As Enel Group sees it emerging across the globe, the real challenge is ensuring that recycling of carbon pricing revenues supports mitigation of distributional and competitiveness impacts”.

The background paper discussed at the event is part of a series of annual discussion papers on topics and policies related to climate change carried out by the Harvard Environmental Economics Program. This ninth edition also draws on relevant empirical evidence, concluding with a look at the path ahead and an appendix by Marcos Barrozo and Harvard Project on Climate Agreements Co-Director Robert Stowe focusing in large part on the political economy of adoption and implementation of carbon pricing policy in South America.