Economies Must Consume Fewer Natural Resources & Recycle More

Carbon Pricing Key to Low Carbon Economy Say EU

The European Union Economic and Financial Affairs Council has declared that carbon pricing is one of the policies needed to drive a low carbon economy.

The European Union Economic and Financial Affairs Council (ECOFIN) has declared that carbon pricing is one of the policies and incentives needed to drive investment in low carbon production, reduce subsidies to fossil fuels, and transition to an economy that consumes fewer natural resources and recycles them within the EU.

In a statement outlining the Council’s conclusions on climate finance, ECOFIN confirmed that “carbon pricing is a key component of an enabling environment for shifting investments towards green and sustainable production technologies, and for promoting innovative solutions”.

It also confirmed that it “supports carbon pricing initiatives as well as initiatives promoting the phasing out of environmentally and economically harmful subsidies and inter alia the continued phasing down of financing for emission intensive projects.”

David Newman, President of the World Biogas Association (WBA) welcomed the declaration, which underlines the thinking behind the WBA conference on carbon pricing due to take place on 11 December in Brussels to mark the 20th anniversary of the Kyoto Protocol.

“Every waste practitioner knows that almost all materials currently cost less to buy new than recycled – the market is therefore sending out a highly misleading signal that it’s better to use virgin resources than recycled ones,” said Mr Newman.

“This is why we need to think about the consequences and effects of a carbon price that would price in positive externalities associated with recycling and negative externalities associated with natural resource exploitation and fossil fuel production/extraction. Carbon pricing could be a key measure to drive the circular economy and reduce greenhouse gas emissions in Europe, but we need to really understand the deeper economic and financial implications before diving in.”

The conference will include speakers from the United Nations Environment Programme, the World Bank, the Climate Action Network, C40 Cities, and others from industry and the third sector.

“The Paris Agreement has given new impetus to the global commitment to tackle climate change, but there’s still an incredible amount to do before we get on track to meet our emissions goals,” said Mr Newman. “Our conference is the perfect opportunity to discuss and analyse the current status on carbon pricing and carbon markets, and how these could influence European policies on resource management and recovery.”

Mr Newman’s intervention comes as the European Commission is both discussing what a future Emissions Trading System (ETS) will look like post-Paris and finalising its Circular Economy package. The two policies are potentially synergic, as pricing in the value or the cost of avoided carbon emissions could have a significant impact upon markets for secondary raw materials from waste.

The call for a more effective carbon price has gathered strength in recent years with the Carbon Pricing Leadership Initiative (which includes major oil companies, government ministers, the International Monetary Fund, and the World Bank) and others arguing the case.

Many believe that a system for pricing in the externalities of carbon emissions is imminent, and it was revealed this week that there has been a more than eight-fold increase in the number of global companies pricing carbon into their business plans over the past four years.

Wendel Trio, Director of Climate Action Network Europe and a speaker at the conference, said:

“Including the external cost of products, for instance through effective carbon pricing, is a prerequisite to ensure the sustainable transition to a low-carbon and resource-efficient economy. For resource recovery to be a full alternative, a five- to tenfold increase of the EU carbon price is needed.”

Dr Adam Read, External Affairs Director at SUEZ Recycling & Recovery UK and a speaker at the conference, said:

“From a waste-sector perspective there are currently more important drivers than getting food waste out of residual waste, namely minimising contamination of dry recyclates and their global markets and supporting the development of more anaerobic digestion facilities to treat organic materials.

"Food waste prevention has the potential to be far more effective and save far more carbon than simply taxing energy-from-waste emissions, for example.

"The waste sector’s ‘unique selling point’ in terms of food waste and carbon accounting is in facilitating avoided emissions, but until there is some sort of legal or market recognition for avoided emissions, either in an ETS-type scheme or through recycling certificates, carbon pricing will have little effect on the waste sector.”

Ollie More, Head of Policy at the UK Anaerobic Digestion & Bioresources Association and a speaker at the conference, said:

“An effective carbon price is essential to ensure that the whole-system benefits of anaerobic digestion (AD) are accounted for. A strong carbon price would recognise the positive externalities that AD offers through the generation of renewable energy and nutrient-rich biofertiliser, which displace fossil-fuel-derived energy and artificial fertilisers respectively. It would also help to put a more accurate, higher price on any methane emissions from landfill.

“A carbon price could lead to the production of 80 TWh of biogas per year in the UK alone, providing a huge boost to AD and other recycling markets across Europe. I’m looking forward to discussing the challenges and opportunities of integrating carbon pricing into the circular economy with a range of other stakeholders at the WBA’s conference in December.” 

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