The Association of Chartered Certified Accountants (ACCA) has called for more ambitious policies to achieve net zero emissions by 2050, targeting green infrastructure investment from the public and private sector and a form of carbon pricing.
ACCA says that global and EU policy-makers and governments have a crucial role in reducing carbon emissions through regulation, the provision of green infrastructure and appropriately targeted subsidies. But as with so much policy designed to change economic behaviour, the adoption of early and anticipated policy changes is the most effective approach. Such policies also need to be pursued at a global level.
ACCA chief economist Michael Taylor said: “Recent ECOFIN’s conclusions on climate finance say that carbon pricing and phasing out environmentally harmful fossil fuel subsidies are key in achieving net zero commitments. We could not agree more. A shift from fossil fuels to low carbon energy requires the replacement of existing carbon-intensive capital with low-carbon capital. Our recommended strategy to reach these ambitious goals involves two key elements: green infrastructure investment from the public and private sector and a form of carbon pricing.”
“ACCA is calling on a global minimum carbon price, as in an integrated global economy unilateral action by individual countries has limits. While substantial progress to net zero can only be made by the bigger emitters such as China, the US and EU reaching that goal themselves, net zero will still be missed unless emerging markets also reduce emissions. The challenge is however much greater for emerging markets striving also for faster economic growth and higher living standards.”
Carbon pricing can take the form of a straightforward tax that raises the price to a certain level or in an emissions trading scheme (ETS) ‘cap and trade’ where the quantity of CO2 emissions is set and permits issued for this quantity. In either case, raising the price of carbon provides incentives to transition towards low carbon alternatives and away from fossil fuels.
Taylor concluded: “In July the EU announced its intention to introduce a Carbon Border Adjustment Mechanism (CBAM) covering iron and steel, cement, aluminium, electricity and fertiliser. An alternative approach than CBAMs favoured by ACCA would be an agreed global minimum price of carbon, which would allow for a lower carbon price floor for countries with lower per capita incomes in recognition of differing responsibilities between countries.”
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