Market mechanisms at the heart of government climate actions

Today, the International Emissions Trading Association (IETA) and <a href=”http://www.edf.org>Environmental Defense Fund (EDF) released The World’s Carbon Markets: A case study guide to emissions trading, a collaborative series of case studies examining carbon market development around the globe.

Note: The case studies are available at www.edf.org/worldscarbonmarkets.

The report compares key features of current and prospective policies in 18 jurisdictions around the world. It is a resource for policy makers, analysts, and anyone interested in learning more about emissions trading.

The report focuses on both mature carbon markets, such as the European Union Emissions Trading System (EU ETS) and the northeastern U.S. Regional Greenhouse Gas Initiative (RGGI), and also emerging policy developments across the world, from Kazakhstan to Mexico to China.

IETA CEO and President Dirk Forrister said, “This is an exciting time for climate action powered by markets. This landmark report showcases the wide range of countries taking serious decisions on climate change. Many have concluded that market mechanisms make the most sense in achieving emissions reductions while preserving economic growth.”

“Emissions trading programs vary in their features, but they all share the key insight that well-designed markets can be a powerful tool in achieving environmental and economic progress,” EDF vice president for international climate Nathaniel Keohane said. “Market-based policies are a proven way to limit carbon pollution and channel capital and innovation into clean energy, helping to avert the catastrophic consequences of climate change. Policy makers considering market-based approaches can take inspiration from the growing number of jurisdictions already headed in that direction. These case studies are meant to help point the way.”

By providing a comprehensive overview of the features of different trading systems, the report also can help to facilitate “linking” of carbon markets, where doing so can enhance the effectiveness and performance of existing programs. For example, California and Québec expect to host their first joint auction in January 2014. The European Union (EU) and Australia will commence a two-stage linking process from 2015.

Mr Forrister commented, “As carbon markets diversify, IETA believes it is essential to communicate the different approaches in a clear way. This report can help policymakers see what their peers in other parts of the world are doing on carbon market design. The imperative to link is still there, to gain greater efficiency and reduce the costs of achieving policy targets.”

Mr Forrister added, “Understanding and comparing program elements is key to building these necessary linkages, and ensuring that environmental integrity is maintained or even strengthened.”

IETA and EDF have developed these case studies to give businesses, policymakers, and thought leaders a clear picture of global carbon market developments occurring around the globe.