Business action and Carbon Markets

Business and Net-zero Transformation

Context of the action

Emphasis on private-sector actors in the context of the Paris Agreement implementation has been increasingly pronounced over the past years. The United Nations climate change talks (COP26) saw the global business community committed to decarbonisation-targeted investment goals. At the same time, business leaders advocated for predictability when it comes to government climate action, and highlighted the importance of introducing and operationalising reliable carbon market mechanisms and leveraging the steering effect of existing trade agreements.

One of SPIPA’s goals has been to support the climate-related engagement of the business community in its partner countries and help the business community to further explore its role in ensuring the advancement of the Paris Agreement implementation.

Within SPIPA’s remit, activities have followed two distinct approaches:

  • Supporting business’s capability to shape and drive climate action and influence necessary policy developments at national scale, inter alia by improving investment and market opportunities for decarbonisation pathways; and
  • Shaping the macroeconomic environment for businesses, most notably by supporting the notion and advancement of carbon markets, as well as adjusting and leveraging international trade regimes for climate action.

SPIPA action

SPIPA has supported several exchange formats targeted at ensuring that members of the business community gain a better understanding of the challenges and opportunities inherent in their engagement in key processes that will shape the transition to a low-carbon – and eventually, a carbon-neutral – economy. These activities comprised mutual exchanges with the European actors on strategies for engaging with existing policy frameworks and exploring potential opportunities emanating from new policy regimes.

Examples include the EU-Australian Climate Business Network that has provided an effective platform for industry sectors with an interest in sustainability to harness the international cooperation and build momentum in the transition to a net-zero economy, as well as a SPIPA-supported dialogue with South Africa’s private sector on decarbonisation pathways that highlighted the relevance of public-private partnerships in achieving a Just Transition.

Business development in the renewable energy sector was, on the other hand, the background for a variety of activities in the Republic of Korea, Japan, Australia and Brazil.

In South Korea, a SPIPA-instigated business roundtable discussion resulted in a government initiative to alleviate current disincentives and provide longer-term stability to enable investment in renewables.

Similarly, in Japan and Australia, tender regulations for offshore wind development were analysed in a SPIPA-supported discussion, with a view to enabling investment. In Japan, activities also focused on the deployment of green hydrogen as an energy source, confirming through mutual exchange with SPIPA’s European partners the need to drive certification. In Brazil, the development of a wind atlas for Espírito Santo, one of the country’s 26 states, could contribute to facilitating private investment in this arena.

With regard to the macroeconomic environment, with SPIPA support, the European University Institute and the Carbon Pricing Leadership Coalition have shared the European experience of carbon pricing and trading systems with partner countries through senior executive training. Training sessions were held in South Africa, India, Saudi Arabia, Mexico, Brazil and Argentina, adapted to the specific conditions for carbon markets of each country. To increase the sustainability of the course and further share the European experience, an open online course has been developed.

SPIPA has also taken action to support the trade-climate nexus through organising activities structured around trade policies that help combat climate change and support the transition to a low-carbon economy.

Here, the examples include a conference that brought together EU and Canadian stakeholders to raise awareness about trade and climate action in the context of the EU-Canada Comprehensive Economic and Trade Agreement (CETA), and in 2021, a virtual EU-Japan Trade & Industry towards Carbon Neutrality online conference. The latter highlighted shared commitments and opportunities for collaboration under the EU-Japan Economic Partnership Agreement (EPA), which facilitated the exchange of experiences between business representatives from the EU and Japan about the potential opportunities associated with green growth on both markets and the global scene, and building on and expanding existing collaboration between EU and Japanese businesses.

This focus has been particularly pursued in the following countries:

South AfricaSouth Africa
South KoreaRepublic of South Korea