Contact: Katie Sullivan, sullivan@ieta.org 

IETA comment on Ontario’s cap-and-trade regulatory proposal 

TORONTO, 25 February – Ontario’s government today released its much anticipated regulatory proposal for a cap-and-trade system, expected to launch in January 2017. This comes a day after the Liberal government introduced Bill 172, the Climate Change Mitigation and Low-Carbon Economy Act (2016). This proposed law includes Ontario’s reduction targets, provisions for creating the province’s five-year climate action plan, and details around the management of “regulatory proceeds” from Ontario’s future allowance auctions and the creation of a new Greenhouse Gas Reduction Account.

Commenting on the draft rules, IETA President and CEO Dirk Forrister says:

“The release of detailed design for Ontario’s cap-and-trade program is a significant step forward for North America’s next carbon market. In fact, it is the first major market development since the Paris Agreement was completed in December. It gives Ontario’s businesses the first insights into how this market may take shape. We look forward to continuing our engagement with Ontario officials as they move to finalize the regulation.”

Once in place, Ontario’s program is expected to eventually link to North America’s largest carbon market, comprised of California and Québec’s systems, which recently held their sixth joint allowance auction. In December 2015, the province of Manitoba also announced its intention to move forward with cap and trade, with the intention of linking to this broader regional market.

“The growing provincial leadership is impressive, and the momentum on carbon pricing across Canada is undeniable,” says Katie Sullivan, IETA’s Director of North America. “Linking these markets brings increased flexibility for business so that high environmental achievements are possible while keeping costs in check.”

She adds: “By using cap and trade, governments can also be sure that the environmental goal – emissions reductions – will be met efficiently and at a low cost. This tool allows Canada to remain competitive in a world where many others, from US states to Europe, China and Korea, are controlling greenhouse gases with similar market-based strategies.”

LONDON, 10 February – Yesterday, the US Supreme Court granted a stay to the US Environmental Protection Agency’s Clean Power Plan pending further legal challenges. Commenting on the decision, IETA’s President and CEO Dirk Forrister says: 

“Despite this ruling, the 2022 enforcement date remains unchanged at this stage. The decision just suspends temporarily the legal obligation for states to submit their implementation plans. While the ruling is procedural and not a direct comment on the substance of the rule , it shows that the Court has some reservations about the rule.  

“The delay adds legal uncertainty about the rule that could have implications for investment planning. This in turn could have negative long-term implications for US emissions levels. This is why IETA has long preferred federal climate legislation that would provide stronger regulatory stability. Still, we will continue to work with our members, states and other interested parties on how market mechanisms can help interested states and regions to consider how to reduce emissions at lowest cost and drive the innovation that our future needs. 

BRUSSELS, 26 January – European policymakers should capitalise on momentum from the Paris climate talks and ensure the revision of the EU ETS keeps the system at the core of the region’s climate change response, says IETA.

In a position paper released today, the business group and its members welcome the proposal to revise the EU ETS for the post-2020 period, to ensure it plays a central role in the EU’s climate policy. This revision process is an opportunity to address key principles for the smooth functioning of the market, such as allowance scarcity and improved coordination of emissions reduction policies, says IETA.

In light of last month’s historic international climate change agreement in Paris, the paper also calls for clarity on the process if the EU is to increase its emissions reduction target every five years and the impact on the emissions trading programme. 

“The EU ETS revision is a welcome step to enshrining in law the political agreement on the EU’s 2030 climate policy and bolstering confidence in the market’s future,” says Dirk Forrister, IETA’s CEO and President. “The Paris Agreement has given a fresh burst of energy to carbon markets globally – and with more systems under development, it is important that existing programmes set an example and work as efficiently as possible.”

The paper also sets out IETA’s position on how best to address competitiveness concerns, in light of a tighter cap of allowances post-2020. Any provisions to address the risk of carbon leakage should be fair, proportionate and harmonised across the EU to avoid causing market distortions, says the paper.

“The EU ETS revision offers a timely moment to address the appropriate level of support needed for sectors genuinely facing a loss of competitive edge due to climate policies, particularly in situations where leakage could increase overall GHG emissions globally,” says Sarah Deblock, IETA’s Director of European Policy. “However, if we are to meet the 2°C target, it is also important that any support does not hinder cost effective emissions reductions and should be phased out as the threat to competitiveness subsides.”

The full paper is available on the IETA website. 

LONDON, 18 January – More than 80 businesses from Europe, North America and Australia and China are meeting in Beijing today for a one-day workshop on emissions trading. 

The workshop, organised by IETA’s Business Partnership for Market Readiness (B-PMR)¹, is supported by China’s National Development and Reform Commission and the World Bank. Representatives from the World Bank’s Partnership for Market Readiness (PMR) initiative will also be in attendance. 

Topics on the agenda include sector-based insights, success factors for emissions trading participation, allowance management strategies and the use of project-based credits.  

“IETA is honoured to have been invited by the Chinese government to organise this first of its kind event for large state-owned enterprises preparing for the national carbon market,” says Dirk Forrister, IETA’s President and CEO. “With the country moving ahead quickly to introduce a nation-wide emissions trading system next year, it is encouraging to see such a productive dialogue between Chinese enterprises and their international counterparts.” 

He adds: “The B-PMR offers IETA and its members a unique opportunity to engage with the next wave of carbon markets, in China and elsewhere.” 

The B-PMR will also be holding an ETS Dialogue in Chongqing on Thursday, at the invitation of the city’s UK Consulate General. 

For more information on the B-PMR, please see http://www.ieta.org/B-PMR.

NOTES

Contact: Katie Kouchakji, press@ieta.org

PARIS, 12 December – IETA welcomes the adoption of the Paris Agreement today, with a clear role for market mechanisms going forward.  

The final Agreement, which governments approved today, sets out a clear pathway for global climate policy. Governments reaffirmed their commitment to keeping the average global temperature increase to 2°C above pre-industrial levels – and pursue efforts to keep this to 1.5°C.

It also has a clear role for markets, both through international cooperative efforts and a new mechanism to support sustainable development. These will be underpinned by robust accounting provisions, key to ensuring environmental integrity and trust.

These are the three elements IETA and 20 other business groups asked for in a letter to governments in October.  

“We congratulate governments on a historic agreement, grounded in a new spirit of cooperation,” says Dirk Forrister, IETA’s CEO and President. “With the endorsement of more than 190 governments and a strong foundation for markets going forward, businesses can begin planning for a vibrant new future.”

He adds: “We look forward to keeping the momentum going from Paris as the agreement moves from promise to action.”

Contact: Katie Kouchakji, press@ieta.org

PARIS, 7 December – IETA is pleased to announce several new appointments to its board and three new fellows.

At its AGM last week in Paris, the business group’s members elected Paul Dawson from RWE as Chairman of the board, supported by Rick Saines of Baker & McKenzie and Matthew Bateson of Rio Tinto as vice-chairmen.

The members also elected three members to fill vacancies on the Council, including PwC’s Jonathan Grant, Fiona Wild from BHP Billiton and BP’s Dan Barry.  The AGM also approved Council members’ re-election for another term, including:

“I am delighted to announce these new appointments, which bring a new range of experience and perspective to our board,” says Dirk Forrister, IETA’s CEO and President. “As carbon markets continue to spread around the world, IETA’s membership is increasingly diverse, both geographically and in terms of sectors, and I feel the new board reflects this.”

The IETA Council also announced the appointment of three new IETA Fellows:

“Frank, Pedro and Anne-Marie bring a depth of knowledge and experience to our Fellows programme, which will be even more crucial as the next wave of emissions trading ramps up,” says Forrister. “Over the years, all three have played key roles in building the profession through IETA.  We are delighted to offer them this tribute for their contributions of time and talent.”

IETA Fellows are announced annually as the organisation’s highest honours to recognise the contributions of individuals in developing market-based solutions to climate change and in strengthening the role of the IETA in building the profession.

PARIS, 2 December – A group of business leaders is keeping the pressure on negotiators to ensure a role for carbon pricing and markets in the Paris Agreement.

At a special event in the IETA/WBCSD Open for Business Hub, representatives from 15 business groups – representing more than 100,000 business around the world – will talk about why carbon pricing is crucial to them and why markets matter for the climate change agreement being negotiated here in the French capital.

The event, being held at 5pm today, follows on from a letter that IETA along with 20 other business groups sent to more than 90 governments and UN climate chief Christiana Figueres in October, highlighting the importance of carbon markets to the future agreement. It also called for three simple elements to be included: provisions to encourage countries to cooperate in meeting their mitigation commitments by enabling system linkages; rules to account for international emissions reduction unit transfers; and tools to accelerate links between carbon pricing systems, such as a central project crediting mechanism.

“Markets can take off from a simple provision in the Paris Agreement, with more elaborated rules in a decision – as we saw 18 years ago, with the Kyoto Protocol,” says Dirk Forrister, IETA’s CEO and President. “The three ‘asks’ from business on markets would help undergird the next wave of climate action and allow for action to start before 2020. The longer we delay, the more expensive it will be.”

“More than 80 governments state in their Paris pledges that they can achieve even greater emissions reductions if they have access to markets, while business has been clear on the need for signals from Paris to mobilise much-needed capital,” he adds. “Negotiators need to ensure that these ambitions are given the right frameworks to flourish.”

“We need a price on carbon – the WBCSD has been clear on this point for many years,” says Peter Bakker, President of the WBCSD. “In Paris this week, more than 20 business focused organisations and associations are sending a clear message to governments that carbon pricing and market provisions are a crucial element of the Paris Agreement. This needs to come into place so that individual nations can set even more ambitious emissions reduction targets and business can work together with governments to ensure that the rise in global temperatures is limited to under 2°C.”

He adds: “Business is actively calling for a price on carbon, we stand ready to do our part, and now it is time for governments to follow our lead.”

The document listing the statements from the 18 business groups that joined the initiative is available here.

IETA has a team on the ground for the duration of the Paris meeting, covering market mechanisms, REDD+, climate finance and the overarching deal. Please contact Katie Kouchakji on kouchakji@ieta.org for any enquiries.

We will also be running a series of events in the IETA/WBCSD Pavilion, located in Hall 3, including daily media briefings at 10.30am CET. Please see our dedicated COP 21 website for more information.

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LONDON, 25 November – Governments need to ensure a new international climate change agreement is reached at the Paris climate talks – and that it includes a role for market-based mechanisms, IETA says today.

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.”