Carbon Growth Workshop in Bogotá

At the first CAPE Partnership meeting in Washington D.C., during the 2017 WB-IMF Spring Meetings, the Colombian Finance Minister Mauricio Cárdenas Santamaría described how Colombia was planning to implement its NDCs, including the introduction of a carbon tax on fossil fuels. He expressed his personal commitment to the CAPE initiative and offered to host a CAPE workshop in Bogota.

Following on that announcement, the CAPE high-level workshop "Environmental Fiscal Reforms for Low Carbon Growth" was jointly organized by the Ministry of Finance and Public Credit of Colombia and the CAPE in Bogota, Colombia, on September 28 and 29 with 200 participants from the Latin American region. The workshop followed a technical training workshop in Shanghai targeted towards EAP and SAR countries and builds on CAPE’s objective of at providing a platform for finance ministers to identify challenges and share best practices for climate action and for the successful implementation of their respective NDCs.

In the opening session, Minister Cárdenas, welcomed the Minister of Environment and Sustainable Development, Luis Gilberto Murillo, and the Senior Director of Environment and Natural Resources of the World Bank, Karin Erika Kemper and declared:

"Colombia is committed to the fiscal policies and reforms that help us successfully implement the Paris Accord, as evidenced by the last year's Structural Tax Reform, which included a carbon tax and other provisions linked to our agenda of environmental sustainability. From the implementation of carbon taxes to the adoption of policy actions to strengthen social and economic resilience, finance ministers today have access to a wide range of instruments to help their countries manage the effects of climate change". Karin Kemper commented: "When it comes to climate action and green development, Colombia has been a strong voice both in the region and around the world. We are pleased to collaborate with Colombia on important initiatives such as CAPE to promote the international dialogue on low carbon development and highlight the vital role of finance ministers and private finance in these efforts."

The workshop was broadcasted widely. Minister Cárdenas and his team extensively used social media vehicles to advertise and cover the workshop. In addition to Facebook live coverage, over 2 million Twitter accounts were reached with exposure to almost 15 million accounts, thus attracting strong interest from the local media.

Among the experts who attended the forum were government representatives and international speakers from Mexico, Chile, Peru, Brazil, Canada, the United States and Norway.

The four sessions of the 2-days workshop focused on:

  1. Financing the transformation to a low-carbon and climate resilient economy
  2. Regional cooperation to fight climate change
  3. Fiscal reforms for climate action
  4. Financing forest conservation and fighting deforestation

Key takeaways from these sessions included the following:

Renewable energy has become a reality in Latin America and some of these technologies already outcompete fossil fuels. Although these technologies have driven the regional transition to low-carbon economies in the past decade, financing a long-term energy transformation requires substantial additional investments, targeted public finance, and innovative financing models. Panelists discussed different instruments to mobilize an expected annual gap of U$ 700 million needed in the energy sector alone for a transition to a low carbon economy in 2030, in light with the growing climate funds and green banking initiatives. Panelists recognized the immensity of the challenge and agreed that a blend of policy measures, climate finance and carbon finance will be needed.

The panelists focused in the ongoing and advanced dialogue at regional level aiming at strengthening regional climate action and cooperation. Despite of the political difficulty of engaging carbon-intensive countries given competitiveness fears, panelists stressed that the advantages of international cooperation in implementing NDCs at a cost-efficient manner are clear (i.e., same resources result in larger emission reductions in jurisdictions with lower abatement costs). Finally, it was discussed how to effectively tackle climate change through the implementation of effective fiscal policies at international level, including an international carbon market aiming at reducing abatement costs and increasing global ambition; and how to develop an enabling and broader cooperation strategy.

Government officials from Chile and Peru shared experiences with fiscal policies towards green growth. They presented the payment for environmental services considered in Peru and the ambitious green tax reform implemented in Chile, respectively. Also, they emphasized that, even with relatively low prices, the implementation of those tools provided clear and strong signals to private sector on where their economies are heading towards (i.e., in case of Chile, after the introduction of the US$ 5/tCO2 carbon tax, the energy sector companies announced the elimination of all thermopower plants from their investment plans). The alignment of carbon taxes with other fiscal policies, including GHG emissions trading systems, where also discussed. The latter follows the example of several subnational jurisdictions in the US and Canada with different climate-related policies co-existing in harmony.

Forest landscapes are central to the economic and social fabric of Latin America and the Caribbean, and essential to the region’s prospects for sustainable development.[1] Learning from different countries – Mexico, Colombia, and Norway – on opportunities and requirements for transformative change was discussed: fiscal reforms (i.e., carbon tax) and incentives (i.e., or reduction in property taxes or forest bond or carbon payments to communities) that could help to reduce deforestation or can be used to finance sustainable forest management, reforestation, and conservation. Also, integrated programs that focus not only on the climate economy (i.e., Payment for ton of Carbon sequestered and REDD+), but also on developing the potential for the entire forests economy (plantations, sustainable forest management, bio-economy, ecotourism, production of ecosystem services, conservation, landscape restoration, SME in Forests etc.) were recommended. Finally, engaging with the private sector in PPP for Forest and Landscape Management, Restoration and Conservation was highlighted as the next frontier. Fighting deforestation not only from inside the forest sector, but also from other sector looking at the driver of deforestation and the entire landscape, and the role of biodiversity as a key input to make the forest more productive was brought to the attention of the public.

Overall, the workshop in Bogota reaffirmed the critical role of finance ministries in fighting climate change and the importance of sharing efforts to use fiscal instruments in implementing the NDCs.