Asia Pacific Carbon Forum, Singapore Role of Markets in Delivering Climate Action Dr. Venkata Ramana Putti Carbon Markets and Innovation Asia Pacific Carbon Forum, Singapore July 11-13, 2018

State of Carbon Pricing 45 national and 25 subnational jurisdictions are putting a price on carbon This map highlights the state of carbon pricing initiatives around the world. As you can see, today 45 countries and 25 states, cities, and regions are putting a price on carbon. Source: World Bank Group, State & Trends of Carbon Pricing (May 2018)

GHG emissions coverage of CP initiatives With the Chinese ETS, carbon pricing initiatives would cover about 20 percent of global greenhouse gas (GHG) emissions, up from 15% last year. Carbon pricing initiatives implemented and scheduled for implementation cover 11 gigatons of carbon dioxide equivalent (GtCO2e) or about 20 % of global GHG emissions compared to 8 (GtCO2e) or about 15% in 2017. This increase is primarily due to the expected coverage of the China national ETS: The ETS will regulate around 1,700 companies from the power sector (including combined heat and power as well as captive power plants of other sectors), which emit more than 26,000 tons GHG per year, or consume more than 10,000 tons of standard coal equivalent (tce) per year. The Chinese system is expected to cover more than three billion tons of CO2e in its initial phases, accounting for about 30% of national emissions. Source: World Bank Group, State & Trends of Carbon Pricing (May 2018)

Growing interest of private sector in internal carbon pricing 1389 companies disclose the use of an internal carbon price – or intend to do so in the next 2 years 607 companies are already using internal carbon pricing as an accounting and risk management tool (17.4% increase from 2016) Many businesses are also showing an increasing interest in carbon pricing. Internal carbon price is becoming a part of their strategy to evaluate current and potential impact of mandatory carbon pricing on their operations. But above all it helps them to identify cost savings and revenue opportunities in low-carbon investments , drive innovation and– effectively ‘climate proof’ their business models and help them to get an edge on competitors.    You can see here the results from the latest CDP report – over 1300 global businesses will be using an internal carbon price by 2019– and the largest growth we are seeing is among emerging markets companies – in places like China, India, Mexico and Brazil.   Companies are also increasingly speaking out in support of government carbon pricing policy.   Source: CDP, Putting a price on carbon - Integrating climate risk into business, October 2017.

Carbon Pricing Readiness through PMR CARBON PRICING INSTRUMENT Supported by PMR SCOPE OF PMR SUPPORT Core technical components From Readiness to Implementation Progress so far and key milestones along countries’ readiness roadmap (beyond PMR) Carbon Tax Emissions Trading GHG Crediting Other: RECs, EECs… Modelling & Upstream Policy Analysis CP Instrument Design GHG Data Mgt & MRV Systems Regulatory & institutional framework Stakeholder Engagement, Comms Milestone events as of Spring 2018 Key expected outcome/output by end of PMR Phase 1 (June 2020) Argentina   Carbon Tax recently introduced; effective next year Decision on carbon tax extension/expansion made, informed by PMR work. Brazil Sectoral analysis on carbon pricing impact completed in several sectors Decision on choice of carbon pricing instrument made. China Successful ETS Pilot Phase. Official launch of National ETS announced. Fully operational ETS in multiple sectors. Colombia Carbon Tax introduced and effective ETS consideration included in new climate bill Decision on supplemental carbon pricing instrument taken; ETS roadmap agreed upon Cote d’Ivoire (TP) Government commitment on pricing carbon reflected in NDC Design and introduction of carbon tax Costa Rica National carbon Neutrality Program, including CR Offset rules, reformed and re-launched Design of GHG Emissions Levy GHG emissions levy introduced; domestic VER market operating; piloting of sector crediting programs Chile Decision on carbon tax extension/expansion and/or supplemental ETS instrument made India Design of meta-registry; development of roadmap for implementation of carbon pricing instruments in waste and MSME sector Registry infrastructure for MBIs in place; decision on full implementation of piloted MBIs in waste and/or MSME sector Indonesia New mandate on use of economic instruments, incl. carbon pricing Choice of explicit carbon pricing instrument made. Jordan Implementation of the MRV system under progress MRV infrastructure in place; choice of carbon pricing instrument made, informed by PMR work Kazakhstan National ETS re-launched, after two-year pause. 3rd ETS compliance period successful. Decision on linking with other allowance markets.

Carbon Pricing Readiness through PMR CARBON PRICING INSTRUMENT Supported by PMR SCOPE OF PMR SUPPORT Core technical components From Readiness to Implementation Progress so far and key milestones along countries’ readiness roadmap (beyond PMR) Carbon Tax Emissions Trading GHG Crediting Other: RECs, EECs… Modelling & Upstream Policy Analysis CP Instrument Design GHG Data Mgt & MRV Systems Regulatory & institutional framework Stakeholder Engagement, Comms Milestone events as of Spring 2018 Key expected outcome/output by end of PMR Phase 1 (June 2020) Mexico   Carbon Tax introduced and effective Mandate and schedule for ETS development &pilot ETS design finalized and pilot phase ongoing, with schedule for operation Morocco MRV framework (for market-based instruments) being developed Decision on choice of appropriate carbon pricing instrument Panama (TP) Deployment of carbon pricing included as key policy instrument in NDC Design and introduction of carbon tax Peru Impact of carbon price introduction assessed Use of int’l carbon markets included in NDC ITMO pilots designed; MRV infrastructure incl. for international transactions in place Philippines Develop’t of policy environment enabling private sector participation as key for mitigation in NDC Choice of carbon pricing instrument made, informed by PMR work South Africa Carbon Tax legislation finalized and to be submitted to Parliament Carbon Tax and Offset System up and running Sri Lanka Identification of a suitable carbon pricing instrument for power and transport sector started; MRV infrastructure in place; strengthened domestic offset scheme in operation; identification of suitable carbon pricing instrument Thailand TVER national offset system in place ETS Implementation roadmap developed & agreed upon Tunisia Mapping of mitigation policy instruments, fully consistent with ambitious energy & climate targets Decision on implementation of appropriate carbon pricing instrument/s Turkey National MRV framework implemented and operational; design & impact of carbon pricing instruments assessed Pilot ready for economy-wide carbon price Ukraine MRV legislation finalized and under consultation MRV legislation and framework implemented Decision on choice of carbon pricing instrument Vietnam Pilot program on GHG Crediting operating Choice of carbon pricing instrument made

Key priorities for action Expanding coverage through the development of new initiatives and the broadening of GHG coverage in existing initiatives; Deepening impact by raising carbon prices, which will send a stronger price signal, triggering more investments in low-carbon technologies;  Aligning carbon pricing with complementary and enabling policies; Progressing on the guidelines of the Paris Agreement to pave the way towards linking domestic pricing schemes and enabling usage of international market mechanisms. As explained there is significant progress but a lot more needs to be done. There is a need to expand the GHG coverage through new initiatives and the broaden coverage in existing initiatives. The carbon prices must be made right so as to deepen the impact of these policies and carbon pricing instruments need to be aligned with complementary policies. Furthermore, these instruments need to be made ready for linkage with other international market mechanisms.