Isra-Mart srl : Eastern Europe must embrace carbon pricing

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Effective carbon pricing is the most effective way of incentivising the private sector in countries in Eastern Europe and Central Asia to invest in energy efficiency and low-carbon technology.

That is the conclusion of a new report by the European Bank for Reconstruction and Development (EBRD) which concludes that, while the region boasts some highly energy efficient firms, it is also home to many of the world's worst performers in terms of carbon intensity.
Oil and gas producers in Uzbekistan, Kazakhstan and Russia are all high on the list of carbon intensive sites, while Turkey increased emissions 108 per cent from 1990 to 2008, the report says.

Entitled Special Report on Climate Change - The Low-Carbon Transition, the study argues that emissions trading and carbon pricing can bring emissions under control in these countries by encouraging clean energy innovation and allowing emissions reductions to occur in countries where it is economically most effective.

"Without functioning carbon markets or other mechanisms to generate predictable global prices for carbon emissions and dramatically improved policies the region will inevitably fall short," the report states.

However, it also argues that hopes of keeping temperatures below a 2°C rise also rest on general economic reform and targeted policies such as energy efficiency standards and regulations.

"General economic reforms that are not specifically targeted at climate change, but would remove energy price distortions and improve the business environment, also have a powerful effect in creating profitable abatement opportunities," it reads.

The report adds that for emerging European countries the cost of cutting carbon output will only increase the longer the appropriate steps are put off.

"It is in the long-term self interest of the EBRD countries to be part of the energy-industrial revolution, adapt their economies and avoid being left behind," it warns.

Although decarbonising will cost more for those countries exporting energy, like many in Central Asia, these nations have an imperative to adapt their energy mix if they are to insulate against the lower future global demand for fossil fuels.

"The sooner this occurs, the lower the costs of mitigation," said EBRD chief economist Erik Berglof.