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BEIJING, January 7, Chinadaily -- Despite the numerous initiatives to reduce carbon emissions across the globe, the world desperately remains on a global warming trajectory of more than 3 C compared to the preindustrial era, far above the COP21 target. Without accelerated reduction of carbon emissions, global warming will continue to have disastrous consequences, starting with the increased frequency of extreme weather events, ending up in mass migrations and hence geopolitical instability, and jeopardizing life on our planet.

On the issue of climate change, Europeans and Chinese have a lot in common.

On July 16 in Beijing, at the 20th EU-China Summit, the two sides "acknowledged the urgency of addressing climate change and the importance of giving full effect to the Paris Agreement".

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By launching what has become the world's largest carbon emissions trading market on Dec 19, 2017, China has shown its resolve to contribute to the fight against CO2 emissions. Since the launch of pilot carbon markets in China in 2011 the price of carbon has remained low: less than 30 yuan ($4.3) per ton. According to Jiang Zhaoli, the deputy head of the National Development and Reform Commission's climate change department, the price of carbon needs to rise in China to 200-300 yuan, a level that he hoped to be attained by 2020.

Up to now the European Union has favored control of the quantities of carbon emissions over its price. It is unfortunate that in doing so, the EU is depriving itself of the most powerful device for cutting carbon emissions, which is the signal given to all those who emit carbon of the price they have to pay.

We know now that this price mechanism is efficient. For instance, a CO2 price was introduced in the United Kingdom 2011 budget and put into force in 2013. CO2 emissions were reduced by 15 percent from 2012 to 2015. During the same period, CO2 emissions fell by only 5 percent in the rest of the EU.

All around the world, putting a significant price on carbon is gathering momentum. Common sense tells us that with a higher price of carbon, activities which induce high greenhouse gas emissions become more costly relative to those that require less or no carbon. The best incentive for producers and consumers to shift their behavior from highly carbon intensive to low-carbon or even free-carbon products is to raise the price of carbon.

If the EU wants to reach its objectives and keep its lead in the fight against global warming, it is time for it to shift toward a carbon price-based system. We have to overcome political and social resilience to this carbon price targeting. We should not fool ourselves: The economic structures will have to adapt themselves to the energy transition and it is much better for industries to do this transformation in a smooth and foreseeable price environment, which contrary to preconceived ideas would lead to more economic growth and more employment.

When China launched its carbon market in December of 2017, EU Climate Commissioner Miguel Arias Canete said in a statement from Brussels: "As the US government turns its back on the fight against climate change, China, the EU and many others are forging ahead ... With both the EU and China committed to emissions trading, two major international players are championing carbon markets to meet their commitments under the Paris Agreement and curb emissions cost-effectively."

If the EU and China decided to engage in a protocol where they would agree to converge on the same price of carbon gradually enlarged to all emitters of CO2 in the two economies, they would give an extraordinary powerful signal to the rest of the world. They would together give a signal of their common appreciation of the threat facing humankind, and it would prove that both China and the EU are together courageously and efficiently addressing the major challenge of our time.

The author is former finance minister of France. This article is part of the Policy Preview Report for G20 Summit in Argentina. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

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