Center for American Progress

RELEASE: CAP and WRI Call for North American Leaders to Consider Proxy Carbon Pricing
Press Release

RELEASE: CAP and WRI Call for North American Leaders to Consider Proxy Carbon Pricing

Washington, D.C. — With the leaders of the United States, Mexico, and Canada set to meet next week at the North American Leaders’ Summit, or NALS, the Center for American Progress and the World Resources Institute released a column explaining how proxy carbon pricing can help governments and businesses transition to a strong low-carbon, climate-resilient economy.

This NALS provides a near-term opportunity for the three leaders to articulate a North American climate strategy that could help propel the shift to clean energy across the continent, as a coalition of progressive research institutions from the United States, Mexico, and Canada—of which CAP and WRI are members—argued in a recent report. Proxy carbon pricing—the practice of factoring in a price on carbon in order to make climate-smart investment decisions—could serve as a key tool to help implement a continentwide climate strategy.

“More and more companies are using an internal carbon price to position themselves for success in future markets,” said Eliot Metzger, Senior Associate with the Business Center at WRI. “They are using proxy carbon pricing in different ways, but they all see that a shift toward low-carbon energy is already underway and inevitable. This is an area ripe for innovation.”

“Proxy carbon pricing can also be a tool for governments that are working to prepare their economies for the global energy transition and, at the same time, doing their part to help propel it,” said Gwynne Taraska, Associate Director of Energy Policy at the Center for American Progress. “It is particularly relevant in the context of cross-border infrastructure decisions, given the high level of energy integration across the continent.”

The United States, Mexico, and Canada should apply a proxy price when they evaluate investments in—and permits for—national and cross-border energy infrastructure, such as pipelines, export terminals, and power plants. A proxy price could help determine whether potential projects will remain financially viable in—and whether they are consistent with—a future world that is rapidly decarbonizing in order to combat climate change.

North American governments should also encourage the use of proxy carbon pricing in the private sector and international development finance, as the column explains.

Read more about the promise of proxy carbon pricing in North American climate action.

For more information on this topic or to speak with an expert, contact Tom Caiazza at [email protected] or 202.481.7141.