GENEVA, 14 June – Carbon markets around the world are poised to shrug off the impact of the COVID-19 pandemic and see higher prices between 2025 and 2030, according to IETA’s latest annual Market Sentiment Survey.

Three-quarters of respondents to the survey, carried out by PwC UK’s Sustainability and Climate Change team for IETA, believe carbon markets globally have remained resilient to the impacts of COVID-19, and the same number believe that recovery from the pandemic will strengthen global carbon markets. 

The full report is available here. 

Prices in the EU Emissions Trading System (ETS) have more than doubled since the beginning of March 2020, when the pandemic first started to impact economic activity across the bloc. Prices in other carbon markets have also risen, though by smaller increments.

“Calls to build back better from the pandemic are aligning with increased climate ambitions both from governments and business to give the world much-needed optimism for the future, reflected in this year’s survey,” says IETA’s CEO and President Dirk Forrister. “Heightened focus on achieving net-zero emissions from a myriad of actors will have a big impact on carbon market growth and bring more attention to the power of markets to deliver on climate ambitions.”

“Price expectations hit record highs in this year's survey, with carbon prices expected to increase across all emission trading schemes,” says Ian Milborrow, PwC Partner. “Earlier this year, China and the UK launched their national emissions trading schemes, and it is increasingly clear that countries see carbon pricing as a central pillar to deliver on ambitious emissions reduction targets.”

Most respondents to the survey indicated that a successful agreement on implementing Article 6 of the Paris Agreement is essential to achieving the global goal of net zero emissions by the middle of the century, though most are doubtful about whether such a deal will be reached this year when countries meet in Glasgow.

Carbon border adjustment mechanisms (CBAMs) were also a hot topic in the survey, with nearly 75% of respondents saying the EU should introduce a CBAM that would also lead to an end to free EU ETS allowances, while two-thirds expect that US President Joe Biden will introduce a similar measure.

On voluntary markets, nearly half of respondents believe that voluntary carbon markets can supply enough carbon credits to match the growth in demand from corporations. One-third of all respondents are exploring the use of Natural Climate Solutions and reforestation/afforestation schemes respectively, as part of their net zero and market growth strategy.

“Carbon pricing is vital to deliver the crucial price signals to drive the innovation and transformative decarbonisation the world’s economies need if we are to achieve the Paris climate goals,” Forrister says. “This decade is our last best chance to avert catastrophic climate change – we need leaders from both the public and private sectors to broaden and deepen their carbon markets.” 

“Across the private sector, internal carbon pricing will be a vital tool to help businesses deliver on their net zero strategies and align with new government policies,” Milborrow adds.

The survey covers recent progress and expectations for compliance and voluntary markets across several geographies, as well as ahead of COP26.

Key findings from this year’s survey:

1. Increased optimism on carbon price expectations as climate ambitions ramp up. Expected prices for 2025 and 2030 have increased for every market surveyed, in comparison to last year’s survey. 


2. Carbon markets have been resilient to COVID-19 and the recovery from the pandemic will provide a boost. This is consistent with last year’s sentiments that markets will recover within two years.

3. Article 6 is seen as key to achieving the Paris Agreement, but participants are uncertain as to whether Parties will reach a consensus at COP26. An overwhelming majority (89%) of respondents believe that Article 6 is essential or will play an important role in achieving the goals of the Paris Agreement. 

4. Border Carbon Adjustment (BCA) mechanisms are seen as increasingly likely in the US and Europe. 

5. Participants said that the EU’s top priorities to reach its 2030 target should be to expand emissions trading to additional sectors and to strengthen the annual cap-setting reduction trajectory. 

GENEVA, 13 May – The past 12 months have seen new emissions trading systems planned and existing ones reformed to be fit for the future, as reflected in the 2021 updated catalogue of IETA’s Carbon Market Business Briefs.

The collection of market summaries captures major news and developments across compliance-driven emissions trading over the past year, offering business executives a quick and accessible overview of all key components and trends in the world’s carbon markets.  

These include briefs on new markets in the UK and Washington state, the expansion of the Regional Greenhouse Gas Initiative in the northeast of the US, updates to Canada’s federal and provincial carbon market landscape, changes to South Korea’s cap-and-trade market, and reforms to the New Zealand Emissions Trading System. The updated collection is available now on the IETA website.

“Despite the broader turmoil of the past year, governments’ commitment to climate action hasn’t wavered, and the expansion of emissions trading to new jurisdictions and improvements to existing systems shows how this commitment is deepening,” says Dirk Forrister, IETA’s President and CEO. “Carbon markets can fuel the innovation the world needs as it seeks to recover from the COVID-19 pandemic in a clean, sustainable and healthy way.”

“Emissions trading is vital to realising ambitious net-zero climate targets of both governments and the private sector,” adds IETA Managing Director Katie Sullivan. “It’s encouraging to see the continued growth in carbon markets and enhanced ambitions around the world, and we call on policymakers to keep the momentum going to ensure we meet the goals of the Paris Agreement.”

First published last year, the IETA Carbon Market Business Briefs outline the coverage, deadlines, penalties, flexibilities, pricing/trading dynamics and other features for each market. The briefs provide commentary from local IETA members and partners on recent market developments and outlooks, including on policy decisions and price movements.

On 1 June, IETA will be hosting a free global webinar as part of its IETA LIVE Series to discuss highlights from the updated Business Briefs and answer questions about carbon markets worldwide. For more information and to register, please see our dedicated events webpage.

GENEVA, 11 May - A new legal gap analysis of Article 6 released today finds that the Paris Agreement offers a number of structural protections to deliver carbon market integrity. Importantly, it explores additional measures that can help mitigate risks and scale up market cooperation.

The analysis was carried out by Pollination, with financial support from the Children’s Investment Fund Foundation and IETA’s Markets for Natural Climate Solutions initiative. 

The goals of the analysis are to identify the current legal risks in transacting units under the Paris Agreement’s Article 6.2, understand the likely procedural requirements, review the best commercial practices and recommend prudent steps that can be taken to mitigate, manage or transfer the risks identified.

The COVID-related postponement of COP 26 has delayed completion of the rulebook for Article 6 of the Paris Agreement. But the climate imperative has meant that the desire of both companies and countries to cooperate on reducing emissions has continued to increase. Consequently, there is growing attention on Article 6.2, which allows countries to engage in carbon market cooperation, respecting the Paris Agreement’s principles of integrity and transparent accounting. 

“As Switzerland’s agreements with Peru and Ghana demonstrate, there’s nothing stopping countries engaging in carbon market cooperation under Article 6,” said Dirk Forrister, President and CEO of IETA. 

“This analysis offers fresh insights into the risk management techniques that businesses can use to bolster investor confidence in these growth markets, while the Article 6 negotiations are progressing,” he continued. “These legal tools can help deliver high environmental integrity in the global carbon market as it expands to meet the Paris goals.” 

Article 6.2 offers one route to an international trading system that brings emissions into balance with compensating removals from both natural and engineered solutions. But given the unfinished rulebook for Article 6, it also creates legal uncertainties around how international trading can work, both practically and commercially. 

The analysis reviews procedures and requirements laid out by the Paris Agreement and Article 6 draft guidance, and goes on to highlight a set of potentially valuable “structural risk mitigation measures” that cut across multiple risks and could further enhance market confidence. They include measures such as a buyer’s club with associated criteria and rules, the establishment of meta registries and the development of self-insurance pools. 

“Current Article 6.2 draft guidance includes core requirements to deliver integrity and avoid double counting, such as authorisation for unit transfers from host governments, commitments to make corresponding adjustments, and the tracking and reporting of unit issuances, transfers and retirements” said Rick Saines, Partner at Pollination. 

“But for Article 6.2 to scale, we need to develop common approaches for contracting parties, whether they be sovereigns or authorised private parties, on how to manage and allocate risk throughout the Article 6.2 transaction lifecycle.” 

A copy of the legal analysis is available here.

TORONTO, 26 April – On 24 April, the Washington state legislature passed the Climate Commitment Act (Senate Bill 5126), which commits the state to an economy-wide cap-and-invest system to cut greenhouse gas (GHG) emissions starting in 2023. This law makes Washington one of 13 states in the US to launch a carbon market.

“We warmly welcome this new ambitious state-level market,” said Dirk Forrister, IETA’s President and CEO. “The programme sets a firm emissions reduction target, and covered sources are free to choose how to make the reductions in a market that rewards additional action with economic value. The system is economically efficient for consumers, workers and businesses alike.”

The state’s new carbon market will help drive emissions to achieve previously-agreed goals of cutting GHGs by 45% below 1990 levels by 2035, and net zero by 2050.

“2021 is shaping up to be one of the most remarkable years in our collective response to climate change," Forrister added. "China and the UK are launching new emissions markets, New Zealand has revamped its system to set an absolute cap on emissions for the first time, and the voluntary market is growing by leaps and bounds.”

Washington’s market has been explicitly designed to link to other “allowance-based” markets such as California’s cap-and-trade system or the 11-state Regional Greenhouse Gas Initiative in the US northeast.

“We’re particularly pleased that Washington has recognised the value of program alignment and linked markets, which can offer greater economies of scale and widen the pool of available abatement,” Forrister said.

“We look forward to playing an active role as the state’s Department of Ecology begins the process of turning legislation into the regulations required to operate the market.”

BACKGROUND INFORMATION

Washington’s economy-wide cap-and-invest program covers all industrial facilities, power stations, natural gas suppliers and fuel suppliers that emit more than 25,000 tonnes a year.

Emissions allowances will be auctioned no more than four times a year, while energy-intensive and trade-exposed installations will receive allocation of free allowances until 2034. Thereafter, these allocations will decline until 2050. 

Auction proceeds will be transferred to two special accounts, the “Forward Flexible Account” and the “Climate Investment Account”, from where they will be disbursed only for specific, climate-friendly projects.

The program will begin its first compliance period in 2023, running to the end of 2026. A cap on emissions will be set by the state’s Department of Ecology. Reviews of the system are set to take place in 2027 and 2035.

GENEVA, 23 April - IETA welcomes the enhanced ambition from some of the world’s largest economies and stands ready to assist and participate in the transition to net zero emissions.

At this week’s Leaders Summit on Climate, President Joe Biden welcomed heads of state from over 40 countries to deliver enhanced climate ambition commitments and reduction targets.  

The new pledges represent a strong increase in climate ambition, aimed at meeting the Paris Agreement goal of driving the global economy to net zero emissions by the middle of the century.

The steeper government goals are expected to drive a significant increase in both public and private investment in emissions abatement, and this in turn will increase interest and demand for carbon removals and offsets.

“This week’s announcements set the stage for a Glasgow success on ramping up climate ambition,” said Dirk Forrister, IETA President and CEO. “We know where national leaders want to go – so now, the focus must turn to how best to deliver it. Our best hope of meeting these goals will be to ramp up our market cooperation and finance to inspire businesses to invest at scale.”

Several leaders made specific references to the critical role of carbon pricing and use of market mechanisms to help drive down emissions and accelerate the transition. France’s President Macron underlined that the transition to net zero requires a price on carbon, while China’s President Xi confirmed that his country’s emissions market would start trading this year.

“As markets in Europe, California, Quebec and South Korea are proving, carbon markets can deliver climate targets faster and more effectively than old style command-and-control policies,” Forrister added. “It is encouraging to see China’s commitment to start its carbon market this year, putting its power sector on a course for a cleaner future.”

SAN FRANCISCO, 22 April – IETA welcomes the Biden administration’s decision to drop its challenge in the 9th Circuit Court of Appeals to the state of California's cap-and-trade program’s linkage with Quebec. A US District court last year ruled that the Western Climate Initiative – representing the linked carbon markets of California and Quebec – does not unconstitutionally conflict with the federal government’s treaty authority nor the Foreign Affairs Doctrine, which claims were based on its earlier decision to withdraw from the Paris Agreement. The US Federal government at the time appealed the decision, and today’s move by the Biden administration brings the challenge to a close. “IETA welcomes the administration’s dismissal of the previous administration’s baseless appeal of this novel constitutional case, as it is fully consistent with rejoining the Paris Agreement,” said Nico van Aelstyn, a partner at Sheppard Mullin who represented IETA in the case. “The well-reasoned decisions of the district court now stand as the law of the case; any future administration would be barred from bringing such a challenge against California’s linkage with Quebec,” he added. “The case thus serves as an important legal precedent supporting the linkages of emission markets across jurisdictions, both subnational and international. Market tools of this kind are critical to addressing the climate crisis.” IETA acted as an intervenor defendant in the case and is a party to the stipulation by which the appeal will be dismissed.

BRUSSELS/LONDON, 15 April - A coalition of more than 40 industry associations from Europe and the UK has written to the President of the European Commission and the UK Prime Minister, urging them to agree to link the UK’s and Europe’s emissions trading systems (ETS) before this year’s COP26 climate summit.

After leaving the European Union last year, the UK has introduced its own domestic emissions trading system, designed along very similar principles to the EU ETS.

“In choosing an ETS over a carbon tax, the UK has shown that carbon markets offer cheaper, more efficient, and legally binding decarbonisation” said Adam Berman, European Policy Director at IETA. 

“If the UK wants to reach Net Zero, linkage to the EU ETS is key. It will allow emissions reduction targets to be reached more quickly, easily, and at better value. A larger market means a better market with more liquidity, fewer competitive distortions which damage industry, and more decarbonisation opportunities.”

The coalition pointed out that linking emissions markets requires two key elements: political will and alignment of climate goals.

“Given the similarities between the UK and EU’s carbon trading regimes, there should be no two emissions trading systems that are easier to link,” the groups said in the letter.

“The advantages of linkage are clear in terms of liquidity, price discovery, and the ability to attract abatement from across Europe rather than just the UK. It would also create a level playing field in terms of carbon pricing, avoiding competitive distortions, and leading to aligned cost implications for industry across the UK and the European Economic Area (EEA).”

A linkage would also send a strong political signal ahead of this year’s climate talks, the groups added.

“Linking the UK and EU ETS ahead of COP 26 would reaffirm the UK and EU as climate leaders, and demonstrate strong advocacy for international carbon markets,” the coalition said. 

“A linking agreement between the UK and EU would show commitment to Article 6 of the Paris Agreement in a year during which the EU hopes to help finalise the Article 6 framework as a key outcome of COP 26, thus ensuring that the EU can lead by example in respect to the international climate agenda."

“Linkage will [also] allow the UK to reach Net Zero faster and more cost effectively,” the group said.

A copy of the letter to Prime Minister Johnson can be found here, and to Commission President von der Leyen here.

GENEVA, 27 January - IETA warmly welcomes today’s publication of the final recommendations of the Task Force on Scaling Voluntary Carbon Markets (TSVCM), which can be instrumental in scaling, transparency, accountability and ambition of the global drive to achieve net zero emissions, in line with the ambitious goals of the Paris Agreement and the requirements of IPCC science.

“We would firstly like to congratulate Mark Carney and Bill Winters for their leadership in driving this important piece of work,” said Dirk Forrister, CEO of IETA. 

“It’s a powerful initiative because it can encourage large emitters to voluntarily reduce their emissions in support of government mandates and beyond."

IETA is pleased at the scale of engagement in compiling the report, and notes that there is still much work to be done to bring the TSVCM’s work to a successful conclusion.

The report supports the goals of increasing global climate ambition even more – and the central role that markets play in achieving the transition to net zero emissions.

IETA looks forward to engaging with fellow stakeholders in advancing the work on such issues as market governance, standardised contracts and stronger market infrastructure to provide transparency and efficiency to an expanding market. 

“This work on the Task Force’s implementation plan is essential so that more financial institutions, investment groups and entrepreneurs can build confidence to invest at scale through carbon markets,” Forrister said.

“We agree that robust standards are essential for net zero, and are pleased that a number of expert consultations are underway by various standards to ensure that they are effective in aligning with Paris goals.”

As IETA’s Governing Council expressed in its Net Zero vision document last year, saying that it sees “a valuable role for promoting high ambition through voluntary commitments that tap international carbon markets for credits to compensate for emissions that cannot be reduced or avoided.”

According to IETA’s Net Zero vision, “many companies... may not have sufficient opportunities to reduce, avoid or remove emissions cost-effectively in their operations.”

Both the voluntary carbon market and the future structures under Article 6 of the Paris Agreement will play a critical role in scaling up such reductions, and this is underpinned by today’s TSVCM report.

IETA is committed to help deliver a growing and effective voluntary market, aimed at achieving the goals of the Paris Agreement and its net zero vision. We congratulate the TSVCM team on producing this report, and we look forward to collaborating on its implementation.

GENEVA, 17 December - The Council of the International Emissions Trading Association is delighted to announce that it appointed two new Fellows at its Annual General Meeting on 15 December 2020.

• Kelley Kizzier served as co-chair of the UNFCCC’s Article 6 negotiations during her tenure at the European Commission and now works as Assistant Vice President for International Climate at the Environmental Defense Fund, a position that continues to draw on her deep expertise, contagious enthusiasm and consensus-building skills.

• Frances Seymour serves as the Distinguished Senior Fellow at the World Resources Institute and has provided years of expert advice on the formation of incentives for forest protection in carbon market designs, building a reputation as a role model for young women who want to be drivers of change by way of environmental leadership.

“Kelley Kizzier and Frances Seymour are luminaries In the fight against climate change – particularly in bringing insight on innovative policies that scale up action at the time we need it most,” said Dirk Forrister, President and CEO of IETA. 

Each year, IETA awards honorary fellowships to individuals in recognition of their contributions to developing market-based solutions to climate change and in strengthening the role of the IETA in building the profession.

Previous nominees as IETA Fellows include leaders such as Christiana Figueres, James Cameron, Joan Macnaughton, John Kilani, Richard Sandor and Anne-Marie Warris. A full list is available here.

“Often our honorary Fellowships have recognised business achievement in carbon markets, but we also want to highlight successful partners in non-governmental groups – because they play such an essential role in getting the right policies in place so that business can grow while protecting the climate,” Forrister said. “Kelley and Frances continue to inspire us to reach for greater climate ambition, tapping the power of market incentives.”

GENEVA, 17 December - Following its Annual General Meeting (AGM) on 15 December, the International Emissions Trading Association (IETA) is pleased to announce the re-appointment of eight Council members for the coming year.

The following Members of the Council were re-appointed:

• Paul Dawson, RWE
• Lisa DeMarco, DeMarco Allen
• Mary Grady, American Carbon Registry
• David Hone, Shell
• Abyd Karmali, Bank of America
• Ed Ma, Suncor
• Rick Saines, Pollination
• Jonathan Shopley, Natural Capital Partners

The AGM also confirmed the continuation of Jonathan Grant as Chair and Lisa DeMarco as Vice Chair.

Full details of our Council and governance can be found at www.ieta.org