Remarks by Angel Gurría,
15 April 2016
(As prepared for delivery)
Madame Royal, Madame Lagarde, Mr. Ban, Mr. Kim, Excellencies, Ladies and Gentlemen:
The OECD has stood with you on the front lines of the global fight against climate change for decades. Indeed, you may recall that the "polluter pays" principle was spearheaded by the OECD back in 1972! In recent years, our ground-breaking work on carbon pricing, fossil fuel subsidy reform, policy alignment for a low‑carbon economy, and climate finance has given countries the analysis, standards, tools and guidance needed to build better, greener policies for better lives.
We must capitalise on the enthusiasm and momentum of last year’s historic COP21 agreement in Paris to step-up collective action on climate change. And, as we discussed at the official launch of the Carbon Price Leadership Coalition last December, a price on carbon is the most cost-effective way to reduce emissions. But the OECD report Effective Carbon Rates in the OECD and Selected Partner Economies shows that 60% of greenhouse gas emissions of OECD and partner economies are not priced at all. This cannot continue! We simply must drive faster on carbon pricing and put the brakes on fossil fuel subsidies.
It’s no secret that fossil fuel subsidies act as a negative price on carbon. Many countries continue to rely on fossil fuels to power their economies and support fossil fuel production and consumption. Our 2015 Inventory of Support Measures for Fossil Fuels identifies more than 800 support measures that collectively cost taxpayers in OECD and BRIICS countries between USD 160-200 billion last year. In many countries, taxes on the most polluting uses of fossil fuels, such as coal combustion, are often taxed at the lowest rates. Fossil fuel subsidies for consumers often end up exacerbating inequality, as they disproportionately benefit higher-income households. And in some developing countries, the budget allocated to subsidise fossil fuel consumption is higher than that dedicated to health or education!
The benefits of action are significant ─ our joint modelling with the International Energy Agency shows that reforms to fossil fuel subsidies would reduce global greenhouse gas emissions by about 3% by 2020 – and up to 10% in some regions with high energy consumption subsidies.
Of course, carbon pricing is just one pathway to a greener future. Alongside our efforts to put a price on carbon, the OECD is facilitating the diagnosis of policy misalignments with climate goals – through our recent publication, Aligning Policies for a Low-carbon Economy – and our complementary work across diverse policy areas, from energy taxation to sustainable land use. Our joint work with the Climate Policy Institute has also helped to track public and private climate finance mobilised to-date by developed countries towards their 2010 UNFCCC commitments.
Ladies and Gentlemen:
The OECD remains firmly committed to clean, green growth. We look forward to strengthening our collaboration with the Carbon Price Leadership Coalition – including through our co-chairmanship of the Working Group on ‘‘Building the Evidence Base’’ – to get us back on a zero net carbon track through strong, credible, and predictable carbon prices. Today’s discussions will focus on measures to advance the carbon pricing agenda further. This is an opportunity that we, our economies, and our planet cannot afford to miss. Together, we can design, develop and deliver better environmental policies for better lives.