LONDON, 19 November – A growing wave of carbon market activity provides good momentum for the climate talks in Paris – and has valuable lessons for the future markets, as showcased in IETA’s GHG Market Report 2015/16.

Entitled Making Waves, this year’s report captures the momentum driving carbon markets, from the tiny ripple of policy support in the Kyoto Protocol out to the latest developments in Ontario, the aviation sector, and beyond. Each section opens with a “memo to policy-makers”, laying out the lessons from each wave of activity. 

“With the approach of COP 21, this report emphasises the opportunity for countries to send out strong policy signals from Paris to prompt the next wave of climate action through markets,” says Dirk Forrister, President and CEO of IETA. “The momentum from a solid agreement could ripple out across the world – and provide a basis for cooperation through carbon markets far into the future.”

He adds: “This year’s report shows how just a few lines in the Kyoto Protocol mobilised the private sector and led to the EU’s pioneering emissions trading system, and the ripple effect from those early steps.”

The report opens with an overview of carbon market developments by Environmental Defense Fund President Fred Krupp and Vice-President Nathaniel Keohane. It then considers different models for linkage between varying pricing systems in an article by Joseph Aldy, Robert Stowe and Bianca Sylvester; an extended version of this study was released earlier this week. An extract from IETA’s forthcoming oral history project is also included, looking at the early years of market activity immediately after the Kyoto Protocol was agreed in 1997.

Other contributors to the report include Ontario’s Minister of the Environment and Climate Change Glen Murray, Connie Hedegaard’s former head of cabinet Peter Vis, RGGI chairwoman Katie Dykes, Shell’s chief climate change adviser David Hone, PwC UK Director of climate change Jonathan Grant, and AGL’s Manager of carbon and renewable policy Cameron Reid.

“Making Waves is also a call to action: it’s about using market forces to disrupt the rising levels of greenhouse gas emissions,” says Forrister. “More than 40% of global GDP is already subject to a carbon market – a share that is set to rise dramatically in the next few years, with potential markets emerging in China and the United States. The Paris agreement is a prime opportunity to forge a link for the next wave of market activity.”