Opening remarks by President von der Leyen at the high level event on carbon markets at COP28

Opening remarks by the President on carbon markets

Prime Minister, dear Pedro,

Mr President, what a pleasure to have you here,

Excellencies,

Ladies and Gentlemen,

Ministers, it is a pleasure to welcome all of you here in our pavilion,

We all know, if we want to keep global warming below the tipping point of 1.5 degrees, we need to cut global emissions. And there is a way to cut emissions while fostering innovation and growth. Put a price on carbon. It is a market-driven instrument. The message is very clear: You are polluting; you must pay a price. You want to avoid the payment; then innovate and decarbonise. Carbon pricing nudges the private sector towards innovation. It makes heavy polluters pay a fair price. And the revenues can be reinvested in the fight against climate change, in innovation and in a just transition. This is not only one of the most powerful tools in our hands, it is also one of the most trusted and the most tested. Governments in all continents have embarked on a similar journey. Countries like Zambia which are joining us today. But also many more, from Canada to China, from New Zealand to Kazakhstan.

What brings us here today is our resolve to boost a global movement. Last June in Paris, we launched a Call to Action to create more carbon markets that are aligned with the Paris Agreement. Today, we are joined by the IMF, World Bank and WTO. You have an essential role to play to support and incentivise change. Together we want to advance on three basic goals. First, we want to assist more and more countries to create and complete their domestic carbon markets. Worldwide, there are already 73 carbon pricing instruments in place. But they cover only 23% of global emissions. This share needs to increase. It will allow for a faster reduction of emissions. It will create a level playing field for international trade. And it will raise more revenues for global climate action, including in the developing world. Let us work on putting a price on all C02 emissions in the world.

Second, we need ambitious carbon markets. Carbon pricing must remove carbon. Let me give you some figures deducted from our own experience. In those 18 years, since the European Union introduced carbon pricing, emissions covered by our system went down by 40% while the economy was growing. And we have raised over EUR 175 billion in revenues. These revenues are going exclusively to climate action, innovation and to developing countries.

My third point, of course, voluntary carbon credits can also play a role. We need the private capital to flow into these carbon credits. But the investors also need certainty that these are effective projects. That is why we need common standards for projects that reduce emissions. We also need private money to flow into projects that enhance biodiversity. Zambia and Kenya, for example, have vast forests. They deserve to be rewarded for keeping them alive. That is of utmost importance. Here too, credits – let us call them nature credits – can play an important role.

COP28 is an essential moment to advance towards these three goals. Our aim is to establish the framework for international cooperation and to set a robust benchmark for carbon credit markets. We need diplomacy, to bring more countries on board. We need openness, to recognise that different countries may set up different kinds of carbon markets. And we need consistency, to make sure all efforts contribute to the fight against climate change. No country can do it alone, no institution can do it alone. Today, we are joining forces to bring all expertise to the table to give carbon pricing and carbon markets the push they deserve.

Many thanks.