LONDON, 8 June – The growth of the European carbon market is the focus of the third chapter of IETA’s oral history of the carbon market, which was released today.

Chapter three of From Kyoto to Paris, available online, talks to key players about the early years of the EU ETS, the challenges that they faced and the future of the market.

“As the world’s first cap-and-trade market for greenhouse gas emissions, the EU ETS experience has a lot of valuable lessons for the markets of the future,” says IETA President and CEO Dirk Forrister. “With more reforms to the system coming in the next few years, it’s important to remember how far emissions trading has come in Europe and how much has been achieved already.”

The overall oral history project, From Kyoto to Paris, charts the path from the 1997 treaty to 2015 and the Paris Agreement. Comprised of both a series of videos and a book, it features interviews with key players in the market’s growth, including negotiators, government officials, project developers, traders and lawyers.

The first two video chapters looked at markets and the Kyoto Protocol, and early trials of emissions trading. Subsequent chapters will look at the growth of the CDM, the role of carbon funds and the Paris Agreement, among other topics. 

Each week, IETA will release another video chapter of the story on our dedicated web page, www.ieta.org/kyototoparis. In early July, the book will be released via Amazon; please email oralhistory@ieta.org to ensure you don’t miss out!

TORONTO, 1 June - IETA welcomes the state of Washington's publication of a draft rule for its emissions trading system.

The state today published its revised proposal for an emissions market for public comment, targeting a 1.7% annual reduction in emissions from industrial and electric power installations.

"We're happy to see Washington's commitment to markets and to linking with regional partners, and we congratulate Governor Inslee and the Department of Ecology on their determination to establish Washington's first-ever rule to cap climate pollution," said Katie Sullivan, director of North America. "IETA looks forward to working closely with the Department of Ecology and the governor's office over the coming months."

"We applaud the outward-looking language on linking to other markets, and on the potential acceptance of emissions allowances from other systems for compliance," Sullivan added. "We recognise the hard work that Washington has done to address concerns over competitiveness and carbon leakage through smart market design."

"IETA does have some concerns concerning the lack of clear language enabling traders and intermediaries to participate in the market," Sullivan said. "Market makers and liquidity providers can play an important role in supporting carbon markets, lowering compliance costs and facilitating carbon reduction and we would hope to see the benefits of this role acknowledged in Washington's proposal."

Contact: Katie Sullivan, sullivan@ieta.org

LONDON (June 1) - The second instalment of IETA’s oral history of the carbon market is now available, focusing on early emissions trading trials.

The overall project, From Kyoto to Paris, charts the path from the 1997 treaty to 2015 and the Paris Agreement. Comprised of both a series of videos and a book, it features interviews with key players in the market’s growth, including negotiators, government officials, project developers, traders and lawyers. 

Chapter two of From Kyoto to Paris, available online, focuses on efforts in the UK to build awareness of emissions trading and trading simulations by industry group EURELECTRIC. 

“Even before there were any compliance obligations in Europe, some visionaries led the way and played a role in educating industry and the power sector about what the future could look like,” says IETA President and CEO Dirk Forrister. “The lessons from this era helped inform the shape of the European carbon market – and are of value to those governments developing new markets today.”

Last week, IETA released the first chapter, which looked at how emissions markets came to be in the Kyoto Protocol. Subsequent chapters will look at the development of the EU ETS, the growth of the CDM, the role of carbon funds and the Paris Agreement, among other topics. 

Each week, IETA will release another video chapter of the story on our dedicated web page, www.ieta.org/kyototoparis. In early July, the book will be released via Amazon; please email oralhistory@ieta.org to ensure you don’t miss out!

Contact: Katie Kouchakji, press@ieta.org

COLOGNE, 25 May – An overwhelming majority of respondents to IETA’s annual market sentiment survey expect an expansion of carbon markets, driven by the Paris Agreement.

Over 80% of respondents to this year’s survey, conducted by PwC, said they expect existing carbon markets to expand as a result of the Paris Agreement – compared with 58% last year. This will be driven by developments at both the national and sub-national level, the survey found.

By 2025, new emissions trading systems (ETSs) are seen starting up in Canada, Australia, Brazil, Chile, Japan, Mexico, South Africa and Turkey, said respondents. This is in addition to the national ETS in China that is expected to begin next year, as well as the Ontario market, the legislation for which was passed last week.

“This is the first real test of market sentiment since the Paris Agreement – and the mood is clearly positive,” says IETA President and CEO Dirk Forrister. “The inclusion of markets in the agreement has boosted morale and opens the door for further opportunities for business to engage in carbon markets around the world.”

He adds: “We are particularly interested in the prospects for new markets taking seed in the coming years – especially as more than 90 governments stated that market access is essential to fulfilling their Paris pledges, according to analysis by IETA and Environmental Defense Fund¹.”

The carbon price respondents feel is needed to achieve the Paris Agreement’s objective to limit warming to well below 2°C jumped by a third this year, to €40. This is in stark contrast to their expectations for prices in major carbon markets from now until 2020, ranging from €6 to €15.

“The gap between price expectations for major markets and the price required to achieve the Paris goals reflects the difference between ambition and reality,” says Forrister. “This needs to be addressed urgently if the world’s political aims are to be met.”

“This survey sends a clear message that governments need to get serious about carbon pricing or they won’t hit the Paris targets,” says Jonathan Grant, Director, PwC, who performed analysis on the survey. “IETA members have highlighted the yawning gap between current prices and what’s needed to achieve the Paris objectives.”

He adds: “With such low carbon prices, some will question whether the policy is working and changing business decisions or if it has become just an administrative burden on companies.”

The survey report will be released at a press conference at Carbon Expo in Cologne on 25 May at 9.15am CET. Hard copies will be available at the press conference and it can also be downloaded from the IETA website.

NOTES

1 See Carbon Pricing: The Paris Agreement's Key Ingredient, released in April 2016

Contact Katie Sullivan, sullivan@ieta.org 

TORONTO, 18 May - The Ontario government’s vote today to establish the province’s cap-and-trade system marked a major victory in the fight against climate change. By harnessing the power of the marketplace, the legislation will prompt a new wave of environmental investment and technology deployment while keeping costs in check for consumers. When it links with California and Québec’s existing carbon market, Ontario will gain the benefits of a broader partnership and increase the momentum for carbon pricing across North America.

Today’s vote in Ontario’s legislature sets the legislative foundation for a provincial carbon market to help cut greenhouse gas emissions to 15% below 1990 levels by 2020, 37% by 2030, and 80% by 2050.

In addition to setting near and long-term targets, Ontario’s new Climate Change Mitigation and Low-Carbon Economy Act ensures that all cap-and-trade auction proceeds are channelled into a Greenhouse Gas Reduction Account. The Act also strengthens the transparency and reporting of Ontario’s forthcoming Climate Action Plan and future investments from auction proceeds.

The province will post final cap-and-trade regulations following royal assent of the Act. The province has confirmed that the first Ontario-only auction will be held in March 2017, with the intention of linking to Québec and California’s joint market in late 2017 or 2018.

“Ontario’s decision marks the one of the first concrete actions on carbon markets since the historic Paris Agreement was agreed in December,” says Dirk Forrister, IETA’s CEO and President.  “Given the size and scope of the legislation, it offers an important example for other governments across North America to examine.”

“The establishment of a market in Ontario next year will see four of the five-largest emitting provinces in Canada putting a price on carbon,” says Katie Sullivan, IETA’s Director of The Americas. “We look forward to working with Ontario as it launches its market program and works towards a link to its Québec and California partners.”

Ontario’s program is expected to eventually link to North America’s largest carbon market, jointly operated by California and Quebec through the Western Climate Initiative (WCI). Today, WCI held its seventh joint allowance auction.

“The addition of a third trading partner to the California and Québec is a major development,” says Sullivan. “The move will drive down compliance costs and allow business and investors to embrace efficiencies across a cross-border program with common rules, tools and infrastructure – all while ensuring environmental integrity.”

She adds: “Linked carbon markets make good business sense – for Ontario’s decision to take this path shows that policymakers are starting to see the economic, trade and environmental benefits of emissions trading over other policy tools.”

Contact: Katie Kouchakji, press@ieta.org

LONDON, 10 May – A new paper  by IETA sets out the business group’s vision for the development of the market-based systems outlined in the Paris Agreement.

The paper, released today, has been circulated to policy-makers and thought leaders ahead of the first post-Paris meeting, which begins on Monday in Bonn, Germany. In A Vision For the Market Provisions of the Paris Agreement, IETA notes the long-term durability of the Paris Agreement, making it especially crucial that its implementation incentivises the maximum level of emissions reductions – including via harmonised carbon pricing systems.

This can be achieved through linking systems, which in turn enables the transfer of emissions units between various systems. Such transfers are also encapsulated in the Paris Agreement, with paragraph 2 of article 6 establishing internationally transferable mitigation outcomes (ITMOs) as means of accounting for such linkages between systems.

“Linking systems can help drive costs down even more, and allow for even greater emissions cuts than operating in isolation – and allow governments to go further than proposed ahead of Paris,” says IETA President and CEO Dirk Forrister. “Taking steps to forge these connections now can provide a boost to the formation of rules guiding ITMO exchanges, including on accounting and transparency.”

He adds: “Recent analysis¹ by IETA and Environmental Defense Fund of the plans governments put forward for the Paris Agreement found that 90 of them state that access to markets is essential for their plan to be fulfilled, if not go further. The ITMO provision in the agreement could see carbon market coalitions or clubs form, as governments seek to up their ambitions.”

The paper also highlights the role of the Emissions Mitigation Mechanism (EMM), as established by paragraph 4 of article 6. This mechanism can cut emissions in countries which are currently not in a position to establish a carbon pricing system yet which need the climate finance that the EMM can bring, says IETA. Robust accounting and governance provisions are again crucial to ensuring environmental integrity of any resultant reductions which are counted towards a country’s Paris Agreement goal.

“The EMM has great potential to involve all countries and to target whole sectors, rather than the project-by-project approach previously seen,” says Jeff Swartz, IETA’s director of international policy. “It can also be a catalyst for more carbon pricing systems, if flexibility remains at its core.”

The full paper is available on the IETA website.

NOTES

1 Please see Carbon Pricing: The Paris Agreement's Key Ingredient, released in April 2016

Contact: Katie Kouchakji, press@ieta.org

NEW YORK, 22 April - Commenting on the signing of the Paris Agreement today, IETA's CEO and President Dirk Forrister says:

"Today’s signing of the Paris Agreement by 170 countries is truly historic. It marks the first step to taking the deal forward. To realize its full potential, policymakers and businesses need to join forces in advancing carbon markets that can provide pricing signals to stimulate innovation and accelerate action. With good rules under article 6, they can enable countries to expand their markets through international linkages. 

Recent analysis by IETA and EDF found that 90 governments need access to markets to achieve their nationally determined reduction targets. Yesterday, we heard the leaders on the Carbon Pricing Panel set out ambitious – and achievable– goals to expand the coverage of carbon pricing. 

It's time to build on the momentum of today's signing. Climate change is not slowing down, and the longer we delay action, the more costly it will be. Market mechanisms can help to significantly cut the costs of action, while achieving the desired emissions reductions quicker than other policy options."

Contacts: IETA: Katie Kouchakji, press@ieta.org  EDF: Jennifer Andreassen, jandreassen@edf.org

LONDON/WASHINGTON DC, 21 April – A bold new global goal for expanding carbon pricing around the world, announced today by the High-Level Carbon Pricing Panel, will require new policies – but could be accomplished through multiple scenarios, an analysis from Environmental Defense Fund (EDF) and the International Emissions Trading Association (IETA) shows.  In its Vision Statement released today, the Carbon Pricing Panel – convened by the heads of the World Bank Group and International Monetary Fund – called for efforts to double the share of global greenhouse gas emissions covered by carbon pricing by 2020, and double coverage again within the next decade. The Panel – featuring the leaders of Canada, Chile, Ethiopia, France, Germany, and Mexico, along with California, Rio de Janeiro, and the OECD – committed to pursuing actions to broaden, deepen, and enhance cooperation among carbon pricing systems around the world in support of the goal.     “The leaders that have joined the Carbon Pricing Panel understand that the world must go further, faster to turn the corner on global emissions and to meet the goals of the Paris Agreement – and that putting a price on carbon is central to realizing that vision. Simply put, market-based policies make it possible for countries not only to meet the targets they announced prior to Paris, but to go beyond them – to cut climate pollution at the scale and pace the science demands,” says EDF President Fred Krupp.  “As the vision statement recognizes, to realize the full promise and potential of carbon pricing, we need to broaden it into new jurisdictions, deepen it where it already exists, and connect systems over time. The Paris Agreement gave countries all they needed to move ahead and cooperate through markets. Now the diverse leaders of the Carbon Pricing Panel have supplied a roadmap for action, a milestone to measure our progress – and a commitment that they will lead the way,” Krupp says.  Putting a price on carbon, through policies such as an emissions trading system (ETS) or a carbon tax, can be an attractive tool for countries to implement the emissions reductions targets they pledged in the lead-up to December’s Paris climate talks.  “The Panel’s visionary leadership is exactly what is needed if we are to achieve the goals set out in the Paris Agreement,” says Dirk Forrister, IETA’s President and CEO. “Carbon pricing is key to enabling nations to proceed with confidence – and in turn could significantly increase ambitions. Already, 90 governments have indicated their interest in using international and domestic markets to fulfil their pledges under the Paris Agreement.”  “The Panel’s goals are ambitious, but achievable – especially if business responds constructively,” Forrister adds. “We pledge to do our part by helping to build business coalitions in support of carbon pricing policies that harness market forces to address the climate challenge. We also plan to support international market linkages that can drive down costs and enable greater ambition over time.”   The EDF-IETA report, “Doubling Down on Carbon Pricing: Laying the Foundation for Greater Ambition”, illustrates a number of possible routes for achieving the dramatic expansion of carbon pricing envisioned by the Panel. The report presents four scenarios for meeting both of the Panel’s targets, to increase carbon pricing coverage from the current level of 12% of global emissions to 25% in 2020, and doubling to 50% coverage in the next decade. The scenarios show that the Panel’s goals are ambitious, in the sense that they will require action beyond what is currently anticipated — especially to reach the 50% goal.  At the same time, the report finds that the goals are achievable, given the existence of multiple plausible scenarios to meet them.  Carbon pricing creates a powerful economic incentive to reduce emissions at the lowest possible cost, generating momentum and impetus for more ambitious climate action. As a result, carbon pricing can play a critical role in meeting the objectives of the Paris Agreement by helping countries to implement their targets and cut emissions even more in the future.  Nonetheless, simply expanding the coverage of carbon pricing will not meet long-run climate goals: the underlying policies must be sufficiently ambitious. The ultimate test of any climate policy is the emissions reductions it achieves.  A 14 April report, also by EDF and IETA, found countries see great potential in carbon pricing as a tool, and can surpass their Paris pledges by carbon pricing through carbon markets. In fact, 90 countries included some mention of market-based policies in their pledges. EDF and IETA are partners of the Carbon Pricing Leadership Coalition. The Coalition brings together leaders from across government, the private sector and civil society to share experience working with carbon pricing and to expand the evidence base for the most effective carbon pricing systems and policies.

Contacts:
IETA: Katie Kouchakji, press@ieta.org
EDF: Jennifer Andreassen, jandreassen@edf.org 

LONDON/WASHINGTON DC, 14 April – The use of market mechanisms can help governments cut emissions even more than the minimum amounts offered in pledges under the Paris Agreement, according to a new report by IETA and Environmental Defense Fund.

With national leaders set to sign the Paris Agreement on 22 April and signalling their commitment to taking it forward, this new analysis highlights an important economic underpinning to its ultimate success. The paper analyses the 188 Intended Nationally Determined Contributions (INDCs) for the Paris Agreement and finds that 90 of these plans mention access to a carbon market will be needed to achieve the respective government’s goals. In several cases, the INDC specifies that a greater goal is possible, if market access and climate finance are available.

Since many INDCs represent the minimum of what governments will do to fight climate change, access to an international carbon market could provide the sound economic foundation to allow climate ambition to be raised – while driving costs down.

The Paris Agreement recognises the valuable role of market-based approaches (including the use of internationally transferred mitigation outcomes) in enabling ambitious reductions in climate pollution.¹ Next month, climate negotiators will meet in Bonn to begin work on guidance for emissions accounting to further support cross-border transfers of mitigation outcomes, as well as rules governing a mechanism for mitigation and sustainable development. 

“Market mechanisms are an important tool in the climate change fight, as their inherent flexibility allows environmental goals to be met faster and at lower cost than old-style regulations,” says IETA CEO and President Dirk Forrister. “As governments make preparations to implement the Paris Agreement, we urge them to accelerate work on the market elements of the agreement and to engage with all stakeholders in a transparent, open manner.

“The business community has a wealth of experience with the world’s carbon markets that policymakers can utilise in forming the rules for the next generation of these systems.”

The paper also considers what the Paris Agreement means for the potential formation of “carbon clubs” to advance climate action. For example, governments could cooperate in the development of rules and standards to ensure the integrity of international emissions trading and to promote greater harmonisation among domestic carbon markets. Numerous economic studies have shown that such cooperation could lower the costs of effective action, leading to even greater emissions cuts than what could be accomplished by countries acting on their own.

“The Paris Agreement was a landmark in the fight against climate change – and the provisions on international cooperation, including through markets, were the unsung hero of the agreement,” says Nathaniel Keohane, Vice President for Global Climate at Environmental Defense Fund.

“Markets have a critical role to play in realising the promise of Paris, by helping countries not only to meet the INDCs they have already announced, but to ratchet up their ambition going forward. The good news is that the Paris Agreement provides all the foundation that countries need to move forward with market-based policies, not only in their domestic actions but also through international cooperation.”

The full paper is available online.

NOTES

1 See article 6 of the Paris Agreement

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 oil, electricity, cement, aluminium, chemical, technology, data verification, broking, trading, legal, finance, and consulting industries.

About EDF:

Environmental Defense Fund, a leading international non-profit organization, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law and innovative private-sector partnerships. Connect with us on Climate Talks, Twitter and Facebook.

Africa Carbon Forum 2016
Kigali, Rwanda, 28–30 June 2016

Promoting Cooperative Climate Action in Africa

Come to Rwanda for the 8th Africa Carbon Forum to learn how to turn climate challenges into opportunities

The international community achieved a resounding success crafting a new, universal climate change agreement at COP21 in Paris in December 2015. The agreement marked the start of a historic new era for Africa – one that holds great challenges but also exciting, transformational opportunities driven by ambitious national action and increased international cooperation on policies and action for low-carbon development, climate finance, market-driven approaches, technology transfer and capacity-building.

Reasons to participate in ACF 2016

The event will cover:

• Opportunities for Africa post-Paris
• Nationally Determined Contributions to climate change action – policy options and opportunities for transformational development in Africa
• Innovative projects, programmes and investment opportunities for low-carbon and climate-resilient development, such as the Africa Renewable Energy Initiative and Africa Initiative on Adaptation, Loss and Damage
• Sources of climate finance and how to access them, including market-based approaches for sustainable development
• Results‐based financing –rewarding real action on climate change
• Training opportunities on minigrids and other Low Emission Development Strategies
• Efforts to increase demand for carbon credits generated by the Clean Development Mechanism
• Cooperative initiatives under the Nairobi Framework Partnership

.. . and much more!

Who should attend?

ACF 2016 features a comprehensive programme of plenary sessions, technical sessions, solutions-focused dialogues and in-depth training sessions specific to the needs of project developers, financiers and policymakers. This free event offers an invaluable mix of information and diverse networking opportunities.

Network building

The Africa Carbon Forum has a proven record connecting African policymakers and practitioners, investors, local project developers and carbon market players.They come together to share the latest knowledge and opportunities for collaboration on regional and global climate change initiatives. For progressive African policymakers, this annual forum is a “must‐attend” event, critical for keeping up to date with climate finance and market- and policy-based approaches to incentivize development.

Join us in Kigali to learn, share and connect at ACF 2016. For more information, see www.africacarbonforum.com.

We hope to see you there!

IETA Secretariat
www.ieta.org