Shadow carbon pricing

Explanation

There is no evidence to be found that CDB applies an internal carbon pricing tool.

E3G recommends that CDB:

• Applies a shadow carbon price across all investments.
• Uses carbon price scenarios that are at the highest end of the range of the High-Level Commission on Carbon Prices as a screen for alignment with limiting warming below 2°C.  CDB should also apply a second – higher – carbon price scenario to assess alignment with limiting warming to below 1.5°C.
• Ensure that indirect emissions, even if not directly controlled by the project (Scope 3), are included. Their inclusion can substantially change the assessment of the environmental impact and thus are material to investment decisions.
• Clarify the procedures on how the shadow carbon pricing is applied to decision making. This includes disclosing which discount rates are used for country categories, alongside the rationale and evidence for such rates.