IETA welcomes the European Commission’s Winter Package as a further step toward harmonising the bloc’s climate and energy strategy.

The Winter Package includes legislative proposals to implement the remaining building blocks of the EU’s 2030 Climate and Energy Framework; in particular, it includes a proposed Renewable Energy Directive and Energy Efficiency Directive.

While we are pleased that the Commission has introduced these proposals to update existing regulations for the next decade, we believe great attention should be paid to ensuring that the new proposals work well in coordination with each other and with the EU ETS. 

Policy overlap should be avoided as a matter of principle. Overlapping policies inhibit the market effectiveness of the EU ETS which is, as the Commission has emphasised, the central pillar of the bloc’s strategy to reduce GHG emissions cost-effectively.

Several studies estimated that emissions trading has the lowest cost per tonne of CO₂ abated compared to other types of regulation. As such, it should be the preferred option to decarbonise the economy in the most cost-effective way. The ETS avoids the unnecessary economic burden to society associated with other types of regulation.

Moreover, an analysis carried out by IETA last year showed that the combined impact of the Energy Efficiency Directive and Renewable Energy Directive would lead to an additional reduction in demand for ETS allowances of more than 700 million tonnes of CO2 by 2020. 

Without additional measures to ensure this reduced demand is reflected in the EU ETS cap, this would have a significant impact on the supply and demand of allowances and on the carbon price.

IETA would therefore welcome clear and transparent estimates of delivery of emission reductions and their timing through these non-market regulations, as well as the CO2 abatement costs associated with these measures, as a way to inform the policy making discussion.

If despite these considerations, there is evidence that some elements of the Winter Package would cause a material impact on the ETS, then an ex-ante discussion is required to assess whether the baseline of the ETS should be adjusted going forward.

The ongoing revision of the EU ETS for Phase 4 is a good opportunity to ensure that the functioning of the carbon market will not be affected by the impact of other policies. 

As outlined in our position paper, IETA recommends that the ETS Directive itself spell out the process by which such assessments and reviews will take place to address transparently the question of policy interaction. 

In summary, to ensure the market is equipped to take on the challenge of functioning for its fourth and longest Phase, IETA encourages greater policy coordination and harmonisation amongst the various energy and climate policies before 2020.

MARRAKECH, November 17 -- The International Emissions Trading Association (IETA) and the Climate Markets and Investment Association (CMIA) are delighted to recognise the Government of Canada as their second Carbon Pricing Champion of 2016.

The award, sponsored by Ecosphere+, was presented to Federal Environment Minister Catherine McKenna at a ceremony in Marrakech.

“This award recognises the remarkable steps Canada has taken in the last year, after it emerged as a significant player in the Article 6 discussions in Paris,” said Dirk Forrister, President and CEO of IETA. 

At the historic COP 21 meeting in Paris last December, Canada emerged as a signatory to the Ministerial Declaration on Carbon Markets, and a member of the Carbon Pricing Leadership Coalition, lending its support to efforts to build effective market mechanisms through the Paris Agreement.

"Since Paris, Canada followed through by proposing a national carbon pricing program, where all parts of the country will see an explicit price on carbon by 2018,” said Katie Sullivan, Managing Director at IETA. 

“In cooperation with sub-national leaders, Canada’s innovative approach will recognise existing provincial systems – including the Quebec-Ontario cap-and-trade system or the Alberta and British Columbia hybrid levy systems. It will also  encourage the other provinces to choose between cap-and-trade or direct pricing systems, starting at C$10/t in 2018 and scaling to C$50/t by 2022,” said Sullivan.

"We’re delighted to see such a progressive stance on market mechanisms, and congratulate Canada on its climate leadership and championing of carbon pricing,” Forrister added.

MARRAKECH, November 10 -- The International Emissions Trading Association (IETA) and the Climate Markets and Investment Association (CMIA) are delighted to recognise the International Civil Aviation Organisation as their first Carbon Pricing Champion of 2016.

The award, sponsored by Ecosphere+, was presented at a ceremony in Marrakech.

Last month, ICAO member nations agreed to create the Carbon Offsetting and Reduction System for International Aviation (CORSIA), the first global, sectoral carbon pricing system.

The agreement in Montreal in October was the culmination of years of work, and sets a goal for the aviation industry worldwide of carbon-neutral growth from 2020 onwards.

“This new market will provide a real source of demand for offsets at a time when the markets need to see strong signals from buyers,” Jeff Swartz, international policy director at IETA, said today.

“CORSIA involved hard work from governments, the private sector and with civil society to provide an outcome that’s good for the planet and good for market-based approaches to reduce emissions. We look forward to working with ICAO on implementing the CORSIA.”

Margaret-Ann Splawn, executive director of CMIA, said: “CORSIA is proof of the ability to establish a global sectoral mechanism rather than a purely national market. This new market creates demand for high-integrity offset standards above and beyond those recognised by other cap-and-trade systems such as the CDM. This creates the pathway to expanding the reach of where emissions reductions can come from.”

Marrakech, 9 November — IETA and the Climate Markets and Investors Association (CMIA) today released a joint statement supporting the inclusion of emissions offsets from Reduced Emissions from Deforestation and Forest Degradation (REDD+) projects in the new market mechanism being developed by the International Civil Aviation Association (ICAO).

IETA and CMIA are pleased that ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) seems likely to make REDD+ projects eligible for airlines to use in meeting their obligations under the mechanism.

However, the two organisations are concerned that there is no clarity yet on the scale or manner in which REDD+ credits may be used.

IETA and CMIA call on ICAO to allow REDD+ projects into its market system as soon as possible, to allow the development of REDD+ projects on a wider scale. At present only a very few countries have implemented REDD+ to generate credits on a national scale.

Please click here to read IETA and CMIA’s position, and makes the case for early inclusion of REDD+.

IETA is pleased to announce the publication of its annual Greenhouse Gas Market Report for the year 2016-2017.

This year’s report takes as its theme “Bridging the Ambition Gap: The Rise, Reach and Power of Carbon Markets.” It celebrates the growing popularity of emissions trading systems by looking at the elements that will build the institutions of the Paris Agreement and new national markets.

“This year’s report reflects on the importance of cooperation and collaboration. It focuses on how to prompt the next wave of market investments in support of the Paris Agreement by following through on the operational elements,” says Dirk Forrister, CEO of IETA. “This vital work of establishing institutions and rules gets underway next week in Marrakech.”

“There is a wealth of knowledge and experience built up in existing market mechanisms around the world, and we hope governments will look to these lessons as they start crafting the implementation details of the Paris Agreement.”

The report is introduced by Dirk Forrister, and contains keynote articles written by Jos Delbeke, the Director-General of the European Commission’s Climate Directorate and Vikram Widge, manager of the World Bank-IFC Climate and Carbon Finance Unit.

There are contributions from Swedish and Brazilian climate diplomats, considering the importance of the key Article 6 of the Paris Agreement to both emerging and developed economies.

This year’s report also contains articles that consider the role that accounting, offsets and forestry will play in the new system. There are also papers looking at key principles of emissions trading that should be considered when creating new cap-and-trade systems around the world.

The report looks at developments in key jurisdictions, including the US, where President Obama’s Clean Power Plan is held up by legal challenges, the EU, where lawmakers are considering reform of the bloc’s carbon market, and Africa, where potential is seen for the emergence of carbon pricing.

IETA’s Greenhouse Gas Market Report is available on the IETA website at www.ieta.org/ghgmarkets2016.

Melbourne/London, 24 October - A new report by the Carbon Market Institute and the International Emissions Trading Association has encouraged the Australian Government to use its 2017 climate policy review to align climate policy implementation with the development of international carbon markets.

The recently released Optimising Australia’s Position in International Carbon Markets report, recommends that the Australian Government’s policy review should consider the opportunities presented by use of international emissions units, by linking to other markets and open up the prospect of export of  Australian Carbon Credit Units (ACCUs).

“The Paris Agreement has set the stage for action on climate change into the second half of the century, and there now exists for Australia an opportunity to optimise its position in international carbon markets as they rapidly evolve”, says Dirk Forrister, President & CEO of the International Emissions Trading Association.

“Of the 189 nations signatory to the Paris Agreement more than 90 have highlighted that their level of commitment is conditional upon having access to international carbon markets”, notes Forrister 

“Australia has already expressed its support for the use of market mechanisms to combat climate change. At the COP22 meeting in Paris in December 2015, Australia supported the Ministerial Declaration on Carbon Markets that was endorsed by 17 other countries”, says Peter Castellas, CEO of the Carbon Market Institute.

The report examines the provisions of the Paris Agreement, key policies enacted by other major emitters and the implications of these measures for Australian trade, including the impact of trade competitiveness and the prospects for the development of an export market for Australian carbon credits. 

‘There are many international and domestic factors influencing the development and design of global carbon markets, and these will have increasing impacts on the Australian economy in coming years”, says Castellas.

 “The 2017 policy review is an opportunity for the Australian Government to consider how the fungibility of ACCUs into other jurisdictions could realise a strong source of foreign demand for domestic abatement”, says Castellas.

The report highlights how  the use of carbon credit instruments from other jurisdictions might support meeting Australia’s domestic targets under a tightening of domestic policies. 

“The use of international units in Australia, under the safeguard mechanism, could bring a number of benefits in meeting compliance obligations,” says Castellas.

 “As the world shifts towards low-carbon development, Australia’s energy-intensive, export oriented economy will become increasing exposed to markets where there is an explicit carbon price; a changing fossil fuel energy mix; and competition from countries whose policies may not be in alignment”, says Forrester.

“The Paris Agreement surprised many with the strength of its commitment to market mechanisms as a tool to combat climate change. In this next phase, the global community will need to work together to maximise the potential for markets, and ensure that this process is carried out in a timely manner to guarantee as much predictability as possibility”, says Forrester.

“The task remains for individual Parties to decide how to build and link markets, and how to ensure they achieve the greatest ambition at lowest cost. Australia can play a pivotal role in this discussion and in the carbon market economy that will evolve”, says Castellas.

London, 6 October - IETA welcomes the adoption by the International Civil Aviation Organisation of a global market-based mechanism (GMBM) at its triennial General Assembly in Montreal. After formal plenary approval tomorrow, ICAO’s decision will mean that the airline industry will be the first sector to adopt a global sectoral market.

ICAO intends for the global aviation industry to achieve carbon neutral growth from 2020 by requiring participating aviation operators to offset any additional emissions above a 2020 baseline. The system will be voluntary from 2021 and mandatory from 2027.

“IETA has always supported the development of market mechanisms as the lowest-cost way to achieve significant reductions in greenhouse-gas emissions, and we are pleased that the global aviation industry has come to the same conclusion,” Dirk Forrister, CEO of IETA said. “We applaud the leadership of the countries and airlines that have indicated their intent to participate in early market development, which will both help the global environment and bolster public confidence in the program.”

IETA notes that ICAO has plenty of work to do in developing its system for monitoring, reporting and verification of emissions, as well as establishing the criteria to select which offsets will be eligible for use.

“We hope that ICAO will take the opportunity to learn from the great amount of work that’s been done by the existing carbon market programs in developing accurate and efficient MRV systems, as well as from the high-quality offset standards that have been developed by the UNFCCC and other verified compliance protocols,” Forrister said. “Once the decisions on these technical issues are made, this market has tremendous potential to deliver the ICAO goals at low cost.”

London, 5 October - IETA welcomes the news that with the ratification of the Paris Agreement by the European Union this week, the global climate treaty will enter into legal force in time for the start of the UNFCCC’s 22nd Conference of the Parties in Marrakech, Morocco.

The entry into force within a year of its agreement is almost unprecedented and underlines the commitment of nations to move quickly to develop the structures that will support the Paris Agreement when it takes effect in 2020.

“The rapid action by key nations to ensure Paris is legally binding shows they take seriously the challenge of keeping temperature increases to below 2 degrees Celsius,” said Dirk Forrister, chief executive officer of IETA. “It also underlines that importance of developing rules and implementation details in a timely manner.”

“Hopefully this will inspire nations to ramp up the ambition of their Nationally Determined Contributions and take the world closer to its goal.”

The ratification of the Paris Agreement is also critical for the future of international market mechanisms to help countries join together and cut greenhouse-gas emissions at lowest cost. 

“Climate change is one of those challenges that is best met together,” Forrister said. “Linked markets help reduce costs for participating industries – and their national economies.”

The Paris Agreement will come into force 30 days after 55 countries accounting for 55% of global greenhouse gas emissions have ratified it. Currently, 63 countries accounting for more than 52% of global emissions have ratified it.