Do you consider that a consensus is building in the business community around carbon EY:pricing on a global level? If so, what factors are driving this change? “We are experiencing a change of perspective. Since the World Bank launched its “Declaration on generalizing carbon pricing,” in May 2014, the need to put a price on carbon has gained widespread momentum. At the UN Climate Summit in September 2014, businesses again expressed the importance of carbon pricing signals to redirect investments. With the Lima- Paris Action Agenda (COP20, 2014) launch, the “non-State” actors were incentivized to make commitments. I’ve been honored to facilitate a series of related ‘Business Dialogues.’ The goal was to exchange on the issues at stake in the negotiations, to discuss means to make the agreement work efficiently, to identify barriers to low-carbon technology deployment and ways to generalize carbon pricing signals.” Some companies feel carbon pricing could threaten their competitiveness. Do you think EY:these are justifiable concerns? Gérard Mestrallet “We are aware of our responsibilities and know that acting now is cheaper than waiting until tomorrow. Today, we need a stable and coherent regulatory framework allowing us to anticipate Chairman and CEO impacts, given long investment paybacks. Putting a price on carbon could be risky if it is not Engie generalized at a global level. Without this generalization, emissions risk being displaced to areas without a carbon pricing signal, and would reinforce delocalization of operations and jobs without solving the problem of emissions. Generalizing carbon pricing would also create opportunities for businesses. It could help the development of low-carbon solutions, which on a larger scale of development will become more profitable, like renewable energies and resource efficiency initiatives.” In your opinion, what tools should be used to implement a carbon pricing system? EY:“Carbon can be priced directly via a carbon tax or a carbon market. Some countries choose to combine the two. Carbon can also be priced indirectly by setting emissions standards. At this stage, it seems unrealistic that all countries could agree upon one global system and a single carbon pricing system. We can assume that carbon pricing signals will develop in different ways depending on the country. Industry leaders have a preference for market systems that allow them to optimize costs by choosing when and where it makes the most economic sense to invest.” Where do you see the biggest barriers to a global carbon market today? Do you view these EY:as barriers only for the short-term? “Until 2020, an international carbon market exists … the Kyoto credits market. However, this market only involves countries that ratified the Kyoto agreement. The carbon credits generated by this market can be used to partially cover regulatory emissions reduction obligations (in the EU ETS market) or to voluntarily offset emissions. Without a post-2020 international agreement, it will be impossible to go beyond voluntary systems, or bilateral country agreements. Furthermore, a market cannot exist without demand. Today, only the EU accepts the partial use of international credits to reach ETS emission obligations. However, we are confident that experience and feedback from the Clean Development Mechanism initiated by the Kyoto Protocol will inspire future cooperation.” With respect to carbon pricing, what are your expectations for this year’s COP21 discussions EY:in Paris? And what is the role of the corporate community in shaping concrete outcomes? “Mobilization on carbon pricing may have already influenced negotiations. The Bonn draft agreement (23 October) makes references to carbon market tools that seemed, until then, to be beyond the negotiation framework. If the agreement text could not directly rule on carbon pricing, it could still incentivize parties to include these signals within their national contributions. The negotiations must support the implementation of comparable calculation methodologies, transparent and reliable monitoring, reporting and verification systems of emissions and greenhouse gas emission reductions to create a trusting environment for investors.” Shifting the carbon pricing debate I 15 Shifting the carbon pricing debate I 15