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SAN FRANCISCO, 11 September – California Governor Jerry Brown kicked off a high-level event focused on carbon pricing today, telling the audience: “Carbon pricing is simple and elegant. Just do it!”

The one-day event, organised by the European Commission, State of California, Government of Canada, IETA, the World Bank and the Carbon Pricing Leadership Coalition, highlighted how carbon pricing can deliver climate ambition. It comes as world leaders gather in San Francisco for the Global Climate Action Summit, intended to drive ambition and accelerate action to delivering on the Paris Agreement’s goals.

“Climate change does not wait for anyone,” Brown told delegates. He noted that his state’s cap-and-trade system has generated around $8 billion in revenues for the state, and that the market is “turning profit into a climate-friendly process”.

Brown’s remarks came on the heels of him signing legislation for the state to use only carbon-free electricity from 2045, followed by an executive order for the entire state to be carbon neutral by 2045.

“The Paris Agreement sets a goal for the world to be carbon neutral from 2050, so California’s goal to achieve this five years early is ambitious – and exactly what this week is intended to inspire,” says Dirk Forrister, IETA’s President and CEO. “California’s cap-and-trade system will have a vital role to play in realising these targets and driving the kind and scale of investments needed to transform the world’s fifth-largest economy into one which is low-carbon and fit for the future.

“Well-designed carbon markets are key to any ambitious climate change response,” Forrister adds. “The world hosts a myriad of emissions trading systems, which are already reducing pollution and driving innovations – it is essential that governments move quickly to finalise the rules for the Paris Agreement so that these efforts are counted towards our shared goals, and to unleash the full potential of carbon markets.”

“Business wants predictability and clarity on policy, so that crucial investment decisions can be made without fear of a costly change of direction,” says Katie Sullivan, Managing Director at IETA. “Well-designed markets enable the low-carbon transition to be made at a steady pace, without shocks to business and consumers.”

“Today’s event highlighted how jurisdictions are embracing – or could embrace – smart carbon pricing while driving new clean business and investment opportunities and remaining competitive,” she adds. “The future is now.”

Bangkok, 3 September - International climate negotiators gather this week in Bangkok for the second part of the 48th meeting of Subsidiaries Bodies to the UNFCCC (SB48-2), with the objective of advancing work on the Paris Agreement "rulebook". The outcome of the talks, which is due to be adopted at COP24, will be a set of rules and implementing details needed to bring the Paris Agreement to life, including guidance for market provisions under Article 6.

Negotiators are mindful that this is the last chance to narrow differences among Parties before COP 24. In the Article 6 discussions, Parties are tasked to produce a draft negotiating text by the end of this week, based on the revised versions of the three informal notes adopted at the first part of SB48 in Bonn in May.

“It’s time for negotiators to get down to business in Bangkok, since they need to have a negotiating text ready by the start of COP24”  said Stefano De Clara, head of international policy at IETA. “This is the last opportunity to make progress ahead of COP 24, and the business community is hoping to see real momentum created in Bangkok.”

"We expect the Article 6 talks to keep pace with the other main negotiating tracks - such as transparency, finance, technology and adaptation,” said Dirk Forrister, IETA’s president and CEO. "As much as we want closure on the Article 6 portion of the Paris rulebook, it has to be seen as part of a larger package for Katowice.” 

IETA will closely follow the discussions on Article 6 of the Paris Agreement, which aim to develop a set of guidelines and rules for cooperative approaches to implement nationally determined contributions (Art. 6.2), for a market mechanism to enable emission reductions (Art. 6.4) and for non-market mechanisms (Art. 6.8).

London, 28 June - IETA welcomes the ICAO Council's adoption this week of monitoring, reporting and verification rules for its CORSIA global offsetting system.

CORSIA, or the Carbon Offsetting and Reduction Scheme for International Aviation, is the first global sectoral emissions reduction system. Airlines will be required to calculate annually the emissions from their flights and buy carbon offsets equivalent to any increase over a baseline of 2019-2020 average emissions.

The Standards and Recommended Practices (SARPs) adopted this week lay out the technical guidance on how airlines should monitor, verify and report their fleets’ carbon emissions.

“IETA broadly welcomes the timely adoption of the SARPs,” says Sophy Greenhalgh, IETA Director. “Entities can now get going with the critical element of developing the sectoral baseline for calculating emissions going forward.”

However, ICAO has yet to establish rules on which offset standards will be approved for use in CORSIA.

“We are now awaiting news on the set-up of the process and governance for approving offset programmes and what further limitations and restrictions will apply with regards to vintage timeframes and project types,” Greenhalgh says.

“Significant work in a short timeframe is now required to develop further details around emission unit eligibility, to give the carbon market and investors time to ensure a highly environmentally robust supply pipeline is available for CORSIA.”

IETA calls for carbon market experts to add their input before those decisions are taken.

“We welcome further opportunities for consultations on program design details,” Greenhalgh says. “We urge that ICAO make clear how it intends to intensify its process so that it can progress work before the next Council meeting in November on emissions unit criteria and other operational elements of CORSIA.”

"It is essential to establish the quality specifications and approval processes as soon as possible for the market to deliver offsets that meet CORSIA’s environmental objectives.”

TORONTO, 15 June - Ontario’s incoming government today issued a statement underlining new Premier-Designate Doug Ford’s determination to cancel the province’s cap-and-trade system, and to resist the federal government’s carbon price backstop policy.

IETA is disappointed by the statement and hopes that Ontario’s new government can be convinced of the benefits of cap-and-trade: delivering pollution benefits, providing valuable funding for clean energy initiatives, and supporting job creation in the fast-growing clean tech sector.

“Climate change is a real problem that impacts real people, and IETA supports international cooperation to address it at the lowest cost possible,” says Dirk Forrister, CEO of IETA.

“Many countries and regions around the world know the benefits of market solutions and are moving to set up systems, including China, the world’s largest emitter. Ontario should remain a world leader in climate action."

Ontario currently participates in the Western Climate Initiative along with Québec and California, and other states, provinces and countries are considering joining the regional carbon market.

“This rushed decision is extremely dangerous and detrimental to Ontario businesses, consumers and trade partners,” says Katie Sullivan, IETA Managing Director. “The implications are far-reaching – not only across Ontario but beyond - and we hope the province pauses to revisit its position or assess other more viable options.”

Note: a fact sheet about Ontario’s cap-and-trade system, and its links to the California and Québec markets can be found here.

BRUSSELS, 6 June - Introduction of carbon floor prices by European countries would add unnecessary overlaps with new reforms to the bloc’s carbon market, creating risks of market distortions with no environmental benefits.

Some EU countries are considering proposals that would “fragment the EU’s carbon market, reducing its efficiency and lead to competitive distortions,” according to a new position paper published today by the International Emissions Trading Association (IETA).

The association is calling on EU member states to refrain from introducing national carbon floor prices and to focus instead on supporting the EU Emissions Trading System’s role as the primary tool for emissions reductions.

“The major reforms adopted last year are still in the process of implementation,” says Dirk Forrister, IETA’s CEO. “It’s important that those decisions be allowed to work before adding more layers of policy. Floor prices aren’t needed when you have an operational market stability reserve (MSR) that automatically adjusts supply.”

The MSR, which will begin to operate in January, will withhold from the market 24% of the calculated oversupply each year from 2019-2023, and 12% of the surplus each year thereafter. The European Commission estimates that the reserve will remove  around 397 million EUAs from circulation in 2019. 

Under a national floor pricing mechanism, a country might set a minimum price for emissions that may or may not be higher than the EU ETS market price. During the four-year legislative process that produced the ETS reform package, EU leaders considered and rejected an EU-wide floor pricing option, instead selecting the MSR as a preferable policy. 

IETA contends that adding this extra mechanism now would act as a tax and not as a dynamic incentive to find lowest-cost emission reductions. It would simply shift emissions from countries with high price floors to others with no floors, offering no real environmental gain.

“A cap-and-trade system guarantees the delivery of the environmental target set by the cap and establishes a price that reflects the marginal cost of abatement,” says Simon Henry, IETA’s director of EU policy. “We call on Member States to maintain commitment to the EU ETS as the primary tool for European emission reductions and not introduce additional carbon pricing measures on industry.”

IETA’s position paper can be found here.

FRANKFURT, 22 May - Respondents to IETA’s annual GHG Market Sentiment survey are optimistic about the prospects for emissions trading around the world, despite concerns about an ambition gap between current trends and the Paris Agreement’s 2°C goal. 

This year’s survey, conducted by PwC, yielded responses from 100+ IETA member representatives, from a variety of sectors and geographies. Responses showed an overall more positive sentiment towards emissions trading around the world, although an overwhelming majority caution that any shortcomings in the Chinese national ETS could have an impact on the mechanism’s reputation. 

And for the first time since 2011, price expectations for Phase III of the EU ETS broke above €10, with the average price in this year’s survey settling at €15.21 – almost double last year’s average. 

“The last 12 months brought a burst of energy to emissions trading around the world, from Latin America, across North American jurisdictions, and in China,” says IETA President and CEO Dirk Forrister. “Governments are getting serious about seizing the power of markets to achieve their climate goals.”

He adds: “However, slow progress at finalising the rules for the Paris Agreement, including on market mechanisms, risks delaying further action and ambition. During this year of focus on increasing climate ambition to ensure the ‘better than 2°C’ goal is met, we urge governments to deliver a good rulebook that can foster market cooperation and inspire more action on the ground.” 

Jonathan Grant, Director in PwC’s climate team, comments: “There is real momentum behind carbon markets around the world – price expectations are on the rise again.  And there are high stakes on the trading system in China.  Success there could inspire other countries to follow, but if it fails it could undermine action around the world.”

“Governments need to get real about their climate ambition and start implementing policy in line with the Paris Agreement.  According to IETA members, there’s a huge gap between current price expectations and what’s needed to achieve the two degrees goal.”

The survey report was released at Innovate4Climate in Frankfurt on Tuesday 22 May at 11am CET and will feature in a discussion at the event on Thursday 24 May at 9am CET. Hard copies will be available at the launch and it can also be downloaded from the IETA website.

NOTES

This year’s IETA survey was conducted among IETA members only, with more than one response per organisation possible, and open from 13 April to 1 May. We received responses from 119 IETA member representatives, from a broad range of locations and organisation types. Participants were given some freedom to select which sections and subject matter they answered on, and therefore a number of statistics are based on samples smaller than 119.

Key findings from this year’s survey

• 71% of respondents believe that if China’s ETS is not considered a success by the global community, the reputation of emissions trading worldwide will be affected. A similar percentage of respondents believe the launch of China’s ETS will encourage other countries to implement a carbon price.

• Expected prices for the EU ETS in Phases 3 and 4 have increased for the first time in three years – to €15 and €22 respectively. However, over 50% of respondents do not believe the EU ETS Phase 4 reforms are sufficient to meet the 2°C goal of the Paris Agreement. 72% of respondents now believe the UK will remain part of the EU ETS post-Brexit - double the amount compared to last year.

• Governments worldwide need “to get real” if they are to raise global climate ambition. Respondents believe that a carbon price of €50/tCO₂ by 2030 is needed to achieve the 2°C goal, which far outstrips their current price expectations.

• 90% of respondents believe a cap-and-trade system will emerge within five years in Latin America. There are also high expectations for broader Pacific Rim carbon market cooperation in within the same timeframe.

• Ontario has dominated the most important carbon market developments in Canada over the last year. Both the launch of its cap-and-trade system (and subsequent linking to the WCI) and the threat of its dismantlement in the upcoming provincial elections have grabbed people’s attention.

• States are once more at the forefront of climate change action in the US: 97% of respondents believe state regulation will be important or very important in driving private sector climate action in the US (vs 54% for federal regulation).

Respondents are uncertain whether this year’s UN talks will successfully agree the rule book for the Paris Agreement or the status of the CDM after 2020. Furthermore, only 19% of respondents believe that developed countries will mobilise the promised $100 billion per annum of climate finance by 2020.

About IETA

IETA is the voice of business on carbon markets around the world. Established in 1999, IETA's members include global leaders in the electricity, oil/gas, cement, aluminium, chemical, mining, technology, standards, verification, broking, trading, legal, finance, accounting and consulting industries.

About PwC:

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. 

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BONN, 10 May - Today negotiations ended at the 48th meeting of Subsidiaries Bodies to the UNFCCC (SB48) in Bonn. Parties agreed to continue talks in Bangkok later this year.

IETA closely follows the discussions on Article 6 of the Paris Agreement. This Article  aims to provide guidelines and rules for cooperative approaches to implement nationally determined contributions (Art. 6.2), for a market mechanism to enable emission reductions (Art. 6.4) and for non-market mechanisms (Art. 6.8).

In Bonn, Parties produced revised versions of three informal notes on these items that will be taken up again in Bangkok. These informal notes are intended to provide the basis for a new negotiating text on Article 6 guidelines, which are due for completion this year. 

“We had hoped to see more progress on this topic at SB48, which is essential if parties are to adopt Article 6 guidance at COP 24 in December” said Stefano De Clara, head of international policy at IETA. “We appreciate that Parties require some time to become comfortable with the current informal notes as a basis for negotiations. We hope that the discussion in Bangkok will capitalise on the understanding built in Bonn.”

“The good news is that all options are still on the table,” said Dirk Forrister, IETA’s president and CEO. “We are happy to see our priorities for Article 6 reflected in the documents, along with a number of options that could hinder the potential of Article 6. We’re very hopeful of a good outcome as they develop a final package.”

“It’s crucial that Parties understand the implications of the different options and define a clear ruleset that harnesses the full potential of international cooperation through markets. IETA stands ready to assist in this process,” Forrister added.

IETA welcomes the fact that an additional negotiating session was scheduled - this allows precious time to build confidence among parties, to have a meaningful outcome at COP24.

“It is vital that Parties push harder to get a negotiating text ready in time to complete their work at COP24,” De Clara said. “Given the lead times necessary for project investments, the Article 6 rules agreed this year can help send a clear investment signal to the business community to do more in advancing the Paris goals.”

BRUSSELS, 26 April - On 26 April, the 2nd informal trilogue meeting on the Regulation on the Governance of the Energy Union will take place. One of the issues to be discussed by co-legislators is improved transparency and coordination of interactions between the EU’s carbon market (EU ETS) and climate and energy policies at Member State and Union level.

In this context, aiming at the overall efficiency of the Clean Energy Package, the International Emissions Trading Association (IETA), The Union of the Electricity Industry (eurelectric), the European Federation of Energy Traders (EFET) and the European Centre of Employers and Enterprises providing Public Services and Services of General Interest (CEEP) are jointly urging the European Parliament, the Council and the European Commission to ensure proper policy coordination. 

We support the European Parliament’s call to Member States to include in their national energy and climate plans quantitative or qualitative evaluation of interactions between the EU ETS and existing and planned climate and energy policies at Member State and Union level. Furthermore, we support the proposal for the European Commission to regularly assess the overall impact of the policies and measures included in the integrated national plans on the operation of the EU’s carbon market. 

We believe that strengthened governance of national and Union policies is vital for the cost-efficient decarbonisation of the EU economy. While the recently agreed EU ETS post-2020 reform is a good step towards improving the functioning of the EU’s carbon market, national and European policies aimed at emission reductions, must be consistent and complementary. The EU ETS must play a central role in decarbonisation.  Therefore, it is a priority to ensure transparency of policy interactions and consistency with other climate policies at national and EU level. Coherent and streamlined energy and climate policies are crucial to allow a robust, market driven carbon abatement signal to emerge.

London (April 16)--The International Emissions Trading Association (IETA) welcomed the International Maritime Organisation’s initiation of a climate change strategy.

The UN body’s environment committee adopted an “Initial Strategy” to cut emissions by 50% from 2008 levels by 2050. The panel will now consider ways in which this goal can be achieved, including potential use of market-based measures. 

“We congratulate the maritime sector for the agreement to address emissions from international shipping,” said Dirk Forrister, CEO of IETA. “Since the international aviation community agreed in 2015 to launch a global sectoral market-based programme, shipping was the missing piece of the puzzle.”

IMO’s Working Group on Reduction of GHG Emissions from Ships will now develop a programme of follow-up actions to implement the Initial Strategy, which may include establishing a market system in carbon reductions.

“IETA is encouraged that the IMO wants to consider the advantages of market mechanisms, offering advantages of low cost and high effectiveness,” Forrister said. “With a strong system of monitoring and verification, a market-based system can be the lowest-cost path to deep decarbonisation.”

“We look forward to engaging with IMO member states and sharing the experience of our energy and industrial members, who have considerable experience in this field.”

Notes:

More than 100 member states of IMO’s Maritime Environmental Protection Committee adopted on April 13 a “climate change strategy” with a goal to peak emissions from international shipping “as soon as possible” and to reduce them by at least 50% from 2008 levels by 2050.

The IMO and the International Civil Aviation Organisation are tasked by the United Nations with tackling emissions from international shipping and aviation. Last year ICAO formally approved an international market-based mechanism that will ensure that all growth in aviation emissions from 2020 is offset.

Action on climate change and sustainable development together is the way forward for Africa. That is the top-line message that regional, public and private sector delegates will carry to international climate negotiations after a week of deliberations in the Kenyan capital.

Some 800 delegates from 59 countries, including ministers and other high-level government and international officials, together with non-state delegates, offered their insights into the challenges and possible responses to climate change, and harvested those insights for consideration in the official international climate negotiation process.

The collecting of views – under the banner of the year-long Talanoa Dialogue launched at negotiations in Bonn, Germany, in November 2017 – was a key part of Africa Climate Week that just concluded in Nairobi.

At the first regional Talanoa event since the launch in Bonn, delegates distilled their deliberations into key messages:

• Finance – Public finance must be instrumental in unlocking private finance
• Markets – Carbon markets are about doing more together, and doing more with less
• Energy – Energy is a high priority, affecting everything. Financial instruments should be put in place to de-risk investment and enhance involvement in smaller and medium-sized enterprises
• Sustainable Development Goals (SDGs) – Achieving the SDGs, including the climate one is the only way forward
• Technology – Businesses are ready to pick up new technology solutions, provided there is a good business case. The voice of the private sector is needed now more than ever.

The top-line message of delegates, that action on climate change is essential for sustainable development, was echoed in remarks by Erik Solheim, Executive Director, UN Environment, at the closing of the first Africa Climate Week, and of the Week’s cornerstone event, the 10^th Africa Carbon Forum.

“We are engaged across most of the Sustainable Development Goals and clearly focusing on how to create synergy between the different goals and especially with the climate goal, which is essential for achievement of all the other goals,” said Mr. Solheim.

The UN’s 2030 Sustainable Development Agenda details 17 global goals covering poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, urbanization, environment and social justice.

“Africa can, should and will be the leader of ambitious climate change action in the world,” said David On’are, a Director at Kenya’s National Environment Management Authority (NEMA), citing a key message coming out of regional ministerial discussions that took place this week in Nairobi. “There is the need to raise ambition, interest, innovation and mobilize the necessary means of implementation to address climate change.”

Countries agreed in Paris in December 2015 to limit global average temperature rise to 2 degrees Celsius and work toward a safer 1.5-degree goal. In coming to their agreement in Paris, countries also recognized that success will require broad-based climate action by all sectors of society, both public and private, and by individuals.

“To achieve our goals, we need more ambition and action. Not just by national governments—they cannot do it on their own—but by all levels of government, business, investors and everyday people working together,” said Patricia Espinosa, Executive Secretary, UN Climate Change, at a high-level session on Thursday. “The good news is that momentum is picking up and we’re beginning to see the transformational shifts we need.”

Africa Climate Week, 9-13 April, was hosted and supported by the Government of Kenya and organized by the Nairobi Framework Partnership, together with NEMA. The Nairobi Framework Partnership (NFP) is celebrating this year its 10^thanniversary, as is the Africa Carbon Forum, which was launched by NFP to spur investment in climate action through carbon markets, mechanisms and finance.

The NFP members include: the African Development Bank, Asian Development Bank, International Emissions Trading Association, United Nations Environment Programme (UNEP), UNEP DTU Partnership, United Nations Conference on Trade and Development, United Nations Development Programme, UN Climate Change, and World Bank Group. Cooperating organizations include: Africa Low Emission Development Partnership, Climate Markets and Investment Association, Development Bank of Latin America, Institute for Global Environmental Strategies, Inter-American Development Bank, Latin American Energy Organization and West African Development Bank.

Quotes from the other Nairobi Framework Partnership Partners

Al Hamdou Dorsouma, Manager for Climate and Green Growth Division, African Development Bank (AfDB):

“The African Development Bank believes that Nationally Determined Contributions (NDCs) are an opportunity for African countries to put sustainability at the center of their long-term development. The dialogue at this first Africa Climate Week demonstrated the ambition and determination by both state and non-state actors, as well as development partners, to push for expanding green and resilient investments, which enable Africa to leapfrog to high impact and clean technologies in productive sectors. The African Development Bank fully supports this ambition through its High 5 priorities, that, when fully implemented, will help Africa to achieve about 90% of its Sustainable Development Goals and 90% of its Agenda 2063.”

John Christensen, Director, UNEP DTU Partnership:

“We have had very interesting 3 days in Nairobi. The 10th Africa Carbon Forum shows that countries in the region are moving forward on the implementation of the Paris Agreement in spite of the still limited international climate finance resources. No doubt this will be challenging and countries in the African region will while taking the lead need support from more developed countries and a private sector that takes part of the responsibility while ensuring it happens in effective and wealth generating ways”

Venkata Ramana Putti, Program Manager, Carbon Markets and Innovation, World Bank:

“Carbon markets and pricing has huge potential to help tackling climate change, and contributing to sustainable development, hence the need to give it attention through a strong collaboration at domestic and regional levels.”

Dirk Forrister, CEO, IETA:

"The strength of Africa’s response to the climate challenge is rooted in how well African business can become a partner in the effort. Many African businesses are interested in how the market incentives of regional cooperation can unleash important new climate business potential in the region."

"Once again, ACF explored this market growth potential and the innovative policy ideas for accelerating climate action.”

Quotes from partners in the Africa Climate Week

Jukka Uosukainen, Director, Climate Technology and Network Centre (CTCN)

“Since the Paris climate Agreement in France in 2016, African governments have started asking for technological support in tackling climate that adversely affects the continent.  By serving as a bridge between developing countries’ technology needs and the proven expertise of finance, private sector and research experts from around the world, the Climate Technology Centre and Network (CTCN) builds partnerships that achieve countries’ climate and development objectives. This forum was a great opportunity to share best practices and lessons learned in Africa”,

Tony Simon, Director General of the World Agroforestry Centre (ICRAF)

“As a Climate Technology Centre and Network founding consortium partner, ICRAF has contributed to knowledge resources of CTCN.  Through new challenges like climate change and CTCN demands and your own wishes and needs we have seen that knowledge services that we offer is what CTCN is all about. The food system is under pressure from climate change. Locally-relevant options that enhance agricultural productivity, climate change adaptation and mitigation need to be adopted. Explore innovative finance instruments. Private equity offers a huge amount of money. Use the money from CTCN and other sources to pull in other funds and use that as an opportunity to blend financing for climate change initiatives,” said Tony Simons, Director General at the World Agroforestry Centre.