“Swift Action” Needed to Implement Carbon Pricing: GFMA

An estimated $100 to $150 trillion of climate-related investment will be required over the next three decades to transition to a low carbon economy, says a report from GFMA and BCG.

Governments need to take “swift action” on legally-enforceable carbon pricing mechanisms if the Paris Agreement target of limiting global warming to between 1.5°C and 2°C is to be met, according to the Global Financial Markets Association (GFMA).

The finance sector lobby group made the call in ‘Climate Finance Markets and the Real Economy’, a report published in partnership with Boston Consulting Group (BCG) ahead of the GFMA’s Annual Capital Markets Conference on Sustainable Finance 

It proposes the rapid development of a Climate Finance Market Structure (CFMS), built on 12 key recommendations, formulated from interviews with over 100 capital market leaders across the financial industry through Q3 2020. Carbon pricing was listed as the number one priority.

Existing carbon pricing schemes only cover 22% of global GHG emissions, but 16% of pricing is less than US$10 per metric tonne of CO2 emissions, proving carbon prices “are not sufficiently priced into markets and the real economy”. Low-carbon alternatives are therefore less competitive with legacy high-carbon activities that benefit from government subsidies.

The report said carbon pricing mechanisms should include … [continues

Read the full article on Regulation Asia’s sister publication, ESG Investor.

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