Carbon Pricing: Does the OECD practice what it preaches?
Liisa-Maija Harju, Environmental Coordinator in the OECD Operations Service on the OECD’s environmental performance, for World Environment Day 2015
Today, more than 22% of global emissions are covered by a carbon price. Almost 40 countries and over 20 cities, states and provinces use carbon pricing mechanisms or are planning to implement them.
These are great figures. The OECD recommends that countries make carbon pricing the cornerstone of climate policy. Price signals sent to consumers, producers and investors alike need to be consistent and facilitate the gradual phase-out of fossil fuel emissions.
It is not just countries but also companies who are interested in this policy tool. A 2014 study shows that nearly 500 companies globally report that they are regulated through global carbon markets. What is not so well known is that at least 150 major companies already use their own, internal price on carbon to manage their greenhouse gas (GHG) emissions.
Some knowledge institutions are riding the trend as well. A Yale University task force concluded that it would be feasible and effective for Yale to institute an internal, revenue-neutral carbon pricing mechanism as part of the university’s sustainability efforts.
The charge at Yale will be set at the social cost of emissions, currently estimated by the US federal government to be $40 per tonne of carbon equivalent (tCO2e). The task force recommended that all facilities operated by the university should be included in the footprint for the carbon charge. Additionally, the carbon charge should be used as a shadow price in planning for major capital investments.
The OECD has been piloting a similar tool. In 2013, the OECD Secretary-General introduced an internal OECD carbon price to address the growth in air travel-related GHG emissions and to encourage management and staff to give greater consideration to environmental aspects in making their travel decisions and arrangements
75% of the OECD GHG emissions from operations relate to official air travel. This volume reflects the missions considered necessary to implement the Organisation’s Programme of Work, as well as the location of events which the Organisation manages or in which its officials participate.
In its initial two-year trial period, 2013-2014, the carbon price was set at 20 euros per tCO2e and was calculated on the basis of the GHG emissions generated by air travel by OECD Directorates and Programmes in the previous year.
The funds collected are invested annually in projects that improve the environmental footprint of the Organisation.
In 2013 the funds were allocated to improving the Organisation’s remote conferencing facilities. In 2014 they were directed to, for example, raising employee awareness about energy consumption, developing employee engagement materials related to energy and paper consumption and the initiation of rainwater harvesting in the Organisation’s premises.
The initiative has been continued into 2015-16. Among changes to the initial scheme, the price has been increased to 25 euros in 2015, and will increase again in 2016 to 30 euros.
The most important objective in the OECD’s GHG management strategy, as is the case for countries and companies, is to reduce emissions in the first place. Indeed, we continue to reduce our operations’ carbon intensity overall: since 2010, per capita emissions have decreased by 0.7 tCO2e/employee (16%) and emissions from buildings have fallen by 21 kgCO2e/m2 (65%). Total GHG emissions (facilities, air travel, employees commuting) in 2014 amounted to 9100 tCO2e, 6% less than in 2010.
We have been able to demonstrate for several years that the accomplishments of our environmental responsibility strategy, [email protected], are consistent with the pursuit of more effective and efficient resource use at the OECD. They enable value for money.
To read more about the overall environmental footprint of the OECD Secretariat’s operations, including the GHG emissions, click on the infographic.
Explore this website to understand OECD’s work on effective carbon pricing.
The Global Forum on Responsible Business Conduct 18-19 June 2015 is held at the OECD to strengthen international dialogue on responsible business conduct (RBC).