The Role of Carbon Pricingin Côte d’Ivoire’s

Climate Change Policy

PMR Partnership Assembly

Wednesday, October, 26, 2017

Tokyo, Japan

Rachel BOTI-DOUAYOUACDM-DNA Coordinator

Ministry of Environment, Côte d’Ivoire

Facts & Figures

• West african country

• Official language: French

• Area: 322’463 sq km (about 2x California)

• Population: 24 million (54th worldwide)

• GDP (nominal, 2017 estimate):

• 36.9 billion USD total

• 1,477 USD per capita

• Share of agriculture in GDP: 24%

• World’s largest producer of cocoa

• Access to electricity: 56% of households

Greenhouse gas emissions

• Power generation, transport, agriculture and waste as main emitters

• GHG emissions reduction target of -28% by 2030 under the Paris Agreement (unconditional)

• Renewable energy target of 42% in power mix

• Currently two coal-fired power plants of 350 MW each in planning

National motivation and benefits sought• Going beyond the traditional CDM

approach and providing potential new (andmore stable and predictable) resources forlow-carbon project developers

• Mobilizing new resources to fundrenewable and low carbon activities, includingto benefit industrial and commercial entitiesto support less carbon-intensive activities andtechnologies

• Contributing to achieve the NDC objectives byreducing emissions “at home” in a cost-efficient way

Regulatory basis

• 2012 - Polluter-pays principle

Côte d'Ivoire adopts Decree No. 2012-1047 of 24 October 2012 setting thedetailed rules for the application of the polluter-pays principle as defined by ActNo. 96-766 of 03 October 1996, Environment

• 2015 –INDC (before PA)

Côte d'Ivoire states in its report on its INDC (now NDC) its clear intent to"explore the opportunity of setting up a carbon market and a carbon price atthe national level"

• 2015 - Paris Agreement

Côte d'Ivoire endorses the Paris Agreement and its decisions which encourageamongst others "incentives for the implementation of emission reductionactivities, including tools such as national policies and carbon pricing” (Decision1 / CP21 para 136)

Steps already taken in 2015-2016

• Brainstorming workshop, November 2015

• Accession to the Carbon PricingLeadership Coalition (CPLC) and PrimeMinister’s intervention in CPLC High-LevelAssembly, April 2016

• Self-funded feasibility study on nationalcarbon price September-October 2016

• Validation workshop of this study,December 2016

CPLC High-Level Assembly Washington D.C. in April 2016

Validation workshop in Abidjan in December 2016

Steps already taken in 2017• Prime Minister’s intervention at the CPLC

High-Level Assembly, April 2017

• Preliminary stakeholder consultations,March-July 2017

• Ministerial participation in Africa Carbon Forum, June 2017

• Stocktaking workshop, September 2017

• Participation in the African Consultative Expert Dialogue on Carbon Pricing, October 2017

• Expression of interest to the PMR,October 2017

• Co-founder of the West African Alliance on Carbon Markets and Climate Finance, November 2017 (to be announced at COP23) - upcoming

CPLC High-Level Assembly in Washington D.C. in April 2017

High-Level Session at Africa Carbon

Forum in Cotonouin June 2017

Carbon pricing approach (1)

National carbon price which maximizes development

benefits

Based on previous feasibility study:

• Policy instrument• Carbon tax (in the medium term)

• possibly ETS (in the long term, subject to common approach at regional level)

Côte d’Ivoire’s NDC, p.1:Explicit strong willingness to reduce the

country’s carbon footprint while privileging mitigation policy options which can lead to

important development co-benefits

High-Level Session at Africa Carbon Forum in Cotonou in June 2017

Carbon pricing approach (2)• Sector coverage:

• Energy including transport sectors

• Considerations to also include forestry

• Tax base:

• Energy including transport sectors: based on the consumptionof any petroleum-related products such as natural gas, gas,diesel or heavy fuel

• Forestry sector: based on the sale of exported wood, firewood or charcoal

• Tax rate:

• CFA 1’000 (USD 1.67) in a low-case scenario and CFA 2,’500(USD 4.17) in high-case scenario

• Rates have been suggested based on a review of carbonprices in other jurisdictions worldwide and on a subjectiveestimate of “psychologically acceptable” price for consumers

• Application level:

• Plan to apply the tax upstream in the value chainAfrican Consultative Expert Dialogue

in Nairobi in October 2017

Brainstorming workshop in Abidjan in November/December 2016

Carbon pricing approach (3)

GHG emissions

avoided annually

(MtCO2e)

Annual revenues if

carbon tax is 1’000

CFA/tCO2e

(in bn FCFA) [in

USD]

Annual revenues if

carbon tax is 2’500

CFA/tCO2

(in bn FCFA) [in

USD]

Tax on petroleum products

11 11.1 [20 m] 27.7 [50 m]

Tax on wood products

482 482.4 [850 m] 1,206 [2,150 m]

Total 493.5 [900 m] 1,233.7 [2,200 m]

• Revenues estimates:

Self-funded feasibility study from December 2016

Activities planned (1)

• TASK 1.1 Organization of an inter-ministry dialogue

• TASK 1.2 Consultations with private sector

• TASK 1.3 Integration into international carbon pricing support initiatives

ACTIVITY 1:

Defining the policy objectives of a carbon tax

given the national

circumstances

• TASK 2.1 Mapping of existing related policies to identify potential synergies/adjustments needed

• TASK 2.2 Definition of scenarios for modeling analysis

• TASK 2.3 Assessment of the fiscal policy consequences and macroeconomic stability

• TASK 2.4: Quantification of co-benefits

ACTIVITY 2:

Analyzing the performance and impacts of the

carbon tax

Activities planned (2)

•TASK 3.1 Optimization of the performance of the carbon tax (determination of optimal options for tax base and tax rates)

•TASK 3.2 Analysis of unwanted effects

•TASK 3.3 Discussion on the use of revenues

•TASK 3.4 Examination of the institutional setup for oversight/compliance

•TASK 3.5 Assessment of impacts on prices in regional power pools

•TASK 3.6 Exploration of regional and international cooperation potential

ACTIVITY 3:

Designing the main elements of a carbon tax

• TASK 4.1 Discussion of results with key stakeholders

• TASK 4.2 Selection of the final carbon tax design

• TASK 4.3 Preparation of an implementation plan

• TASK 4.4 Development of legal documents

• TASK 4.5. Capacity building for domestic public technical staff on implementation, operation, and enforcement

ACTIVITY 4:

Selecting the final carbon tax

design and preparing its

implementation

Timeline and Budget

• PMR resources USD 450-500k

• Potential opportunities for co-funding• CPLC - USD 100k (TBC), e.g. analysis distributional impacts, analysis

power pools

• UNFCCC - USD 80k (TBC), e.g. analysis regional approach

ACTIVITY 1:

Defining the policy objectives of a carbon tax given the national circumstances

ACTIVITY 2:

Analyzing the performance and impacts of the carbon tax

ACTIVITY 3:

Designing the main elements of a carbon tax

ACTIVITY 4:

Selecting the final carbon tax design and preparing its

implementation

January 2018 - April 2018

May 2018 -April 2019

March 2019 -June 2018

July 2019 -December 2019

Challenges identified

High-level political support

Technical assistance

Financial support Inclusive process for all stakeholders

✓Strong support from the Prime Minister’s Office

Very limited resources available domestically

Some support from UNFCCC, BOAD and CPLC, but more

expertise/experience required

✓Consultations well started, but to be

extended and deepened

Working with the PMR

• Peer exchange• Technical assistance• Financial support

• Pioneer role and insights into carbon pricing potential in low-income countries

• Leadership in subsharan Africa