ICC spotlights economic instruments to green economies at UNFCCC
An ICC-led side event at last week’s United Nations Framework Climate Change Conference (UNFCCC) in Bonn brought together leading experts to deliberate financial and economic instruments that can be used for environmental policy-making.
The Financial instruments for green growth event included discussions on the spectrum of fiscal and market-based mechanisms that aim to promote the production and use of environmentally sound products and processes within a market framework. It also showcased how intergovernmental bodies such as the International Finance Corporation have been enabling ‘green’ investments using public funds to de-risk private investments in high-tech and high-risk investments.
Reviewing the different instruments on their efficiency in scaling up ‘green’ investments, Anna Theeuwes, Tax Policy Manager at Shell International, said: “Whether taxes, subsidies or other policy instruments are employed, they need to be based on cost-benefit analysis, transparent, and economically, environmentally, and socially effective.”
“When considering taxation as a potential instrument, it is important to understand taxation is levied on a country basis and not on a coordinated and worldwide (or even large regional) basis, requiring to take into account cross-border trade issues and their pricing effects caused by such domestic tax rules.”
Andrei Marcu, Head of the Centre for European Policy Studies Carbon Market Forum and Advisor to the incoming Polish UNFCCC presidency, said: “Market mechanisms remain an economically viable pathway for several countries to reduce emissions, which have been showcased through the growing numbers of regional and national carbon markets, such as in China. However, market-based mechanisms are not a one-size-fits-all solution and accompanying instruments and an international coordinated enabling framework are needed.”
Panellists concluded that addressing issues such as carbon leakage – particularly in times of multiple economic crises and competitiveness concerns – requires an international coordinated effort under the UNFCCC. This would ensure enabling frameworks and markets are put in place to reduce the barriers that prevent businesses from trading and investing in more sustainable goods and services.
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