Challenge aims to increase carbon pricing coverage to 60% of global emissions by 2030.

By Dale Lunan

Environment ministers from Canada and Chile launched the Global Carbon Pricing Challenge November 15 at the COP27 conference in Egypt, calling on countries to implement carbon pricing at the core of their climate strategies.

Canadian environment minister Steven Guilbeault and Maisa Rojas Corradi, Chile’s environment minister, were joined by representatives from New Zealand, Sweden, the UK and others in a COP27 panel discussion aimed at expanding the use of carbon pricing by strengthening existing systems and supporting emerging programmes.

“Countries around the world are realising that pricing carbon pollution can reduce emissions and fight climate change at the lowest cost while also spurring clean innovation,” Guilbeault said. “Working together with like-minded nations, we can triple the global coverage of carbon pricing as an important step toward achieving net zero by 2050.”

The Global Carbon Pricing Challenge builds on the Pollution Pricing Challenge issued by Canadian prime minister Justin Trudeau last year at COP26 in Scotland.

About 20% of all global greenhouse gas emissions are covered by carbon pricing; the goal of the carbon pricing challenge is to raise that level to 60% by 2030.

Canada is seen as a leader in carbon pricing, with a system in place that puts the current price of carbon at C$50/metric ton of CO2-equivalent (CO2-e) but legislates annual increases that will take the price to C$170/mt of CO2-e by 2030.

And in October, it set out a plan to establish carbon contracts for difference, a key framework if Article 6 of the Paris Agreement, which envisions a global market for trading emissions credits, is to be enacted.

“Chile recognises that Article 6 of the Paris Agreement is an important mechanism that allows countries to implement mitigation actions in a cost-effective manner,” Rojas Corradi said. “And it is one of the mechanisms that promotes participation from the private sector, which is key for increasing ambition. This partnership will be key to expanding the adoption of carbon pricing worldwide and make the system more effective and transparent.”