Carbon pricing workshop enables dialogue among countries in the region to explore strategies to strengthen ambition and climate finance in Latin America and the Caribbean

For a week, the first workshop on Carbon Pricing and Article 6 brought together decision-makers who met at ECLAC headquarters in Santiago, Chile, to give an overview of the different carbon pricing instruments; share experiences  from the implementation of carbon pricing instruments; and strengthen knowledge about  Article 6 of the Paris Agreement, by explaining its opportunities, challenges, requirements and implications.

The regional workshop was co-organized by the Carbon Pricing Platform in the Americas (CPA), the Regional Collaborating Center (RCC) for Latin America of the United Nations Framework Convention on Climate Change (UNFCCC), the World Bank and ECLAC, with the support of the European Union's Euroclima Program.

The first day of the workshop was focused on the importance of international cooperation in carbon markets, a fundamental aspect for the effectiveness of climate policies. Participants discussed the opportunities provided by carbon pricing instruments to strengthen climate action, mobilize finance and help countries meet their NDCs.

ECLAC presented the publication “Economic Policy and Climate Change: Carbon Pricing in Latin America and the Caribbean”, which shows the application of these pricing instruments in countries of the region and highlights the need to apply higher carbon prices that correspond to the costs of the externality generated by carbon emissions.

The second day was focused on Emissions Trading Systems, going into the detailed characteristics of its operation, including the importance of data, institutional strength, and governance. These systems must have an emissions cap, specify the gases covered, define a period, and include key economic sectors, in addition to establishing prices that encourage changes in the behavior of the actors.

Victor Ortiz, director of the International Carbon Action Partnership (ICAP) emphasized that “emissions trading systems seek to find solutions and mechanisms to reduce greenhouse gas emissions most cost-effectively; for this, all emissions must be justified, supported by the best available information; also, emissions trading systems must have a robust monitoring, reporting, and verification mechanism, which is the basis for compliance”.

During the third day, the Regional Dialogue “REdiCAP” on carbon pricing took place.  Representatives from Brazil, Canada, Chile, Colombia, the European Union, and the State of Querétaro in Mexico shared their progress and challenges in the implementation of carbon pricing in their respective territories. Ana Dominguez, specialist in cooperative approaches from RCC-UNFCCC for LAC identified key elements for the success of carbon pricing instruments, such as “clear communication of system objectives, the involvement of key stakeholders in a multisectoral coordination with support of public and private sectors, transparency and the flexibility to involve local actors.”

The fourth day was focused on presenting the context of the Paris Agreement, the NDC ambition cycle, and cooperation under Article 6 where Article 6.2, Article 6.4, and Article 6.8 were presented in detail. The importance of ensuring good financing and fostering collaboration between all actors was discussed. It was concluded that it is crucial to establish a robust monitoring, reporting, and verification (MRV) system to ensure the integrity of emission reductions and build confidence in both the public and private sectors.

On the last day of the workshop, expectations regarding the operationalization of Article 6 and its potential impact on private finance were discussed, where attendees agreed that Article 6 is expected to facilitate access to private finance for climate action, under a clear and robust regulatory framework that supports these efforts.

The conclusions of the event, presented by a panel of experts, reflected a growing momentum in the region to implement carbon pricing, repeatedly highlighting the need to do an upwards adjustment to the carbon prices being implemented in the LAC region in order to align them with climate objectives. It was emphasized that carbon pricing policies must be integrated into economic and social development strategies to achieve positive and sustainable results.

This event has laid the groundwork for an enriching and collaborative dialogue that will contribute significantly to efforts to address climate change in Latin America and the Caribbean, building a more sustainable future for the region. The workshop underscored that international cooperation and regional collaboration and coordination are essential to advance the implementation of carbon markets and identified important challenges to move towards a more inclusive, sustainable, and just development.

Participating countries and attendees at the regional event called for the workshop to become an annual event to share progress and challenges around carbon pricing and exchange experiences.  The presentations of the workshop are available at the following link Carbon Pricing Workshop and Article 6 of the CPA and REdiCAP to review the discussions and knowledge shared, thus facilitating their access.