GENEVA, 15 December - IETA welcomes the decision by the Executive Board of the Clean Development Mechanism to temporarily extend CDM operations past the end of 2020. This means that projects can continue to operate while negotiators complete the rulebook for Article 6 of the Paris Climate Agreement and decide on the future of the CDM at COP26 in Glasgow next year.

“The decision offers a lifeline to CDM offset projects around the world,” said Dirk Forrister, President and CEO of IETA. “It brings a degree of clarity that will enable the continued flow of finance to greenhouse gas reduction projects  in the world’s largest crediting system.”

IETA and other business observer groups have called repeatedly on UNFCCC negotiators to resolve CDM transition issues as part of the decisions on a rulebook for trading provisions of the Paris Climate Agreement. 

But Article 6 negotiations stalled at COP25 in Madrid last year, adding pressure for resolution at COP26 in Glasgow this year. 

However, the postponement of COP26 due to the Covid-19 pandemic left international negotiators with no opportunity to resolve the issue before the end of the second commitment period under the Kyoto Protocol on December 31, 2020.

A dispute arose when three CDM Executive Board members asked for a review of the issue as part of their consideration of requests for extensions of crediting periods for several operating projects. This review process exacerbated uncertainties on the future of the CDM. 

The dispute threatened the continuation of operating projects and Programmes of Activities (PoAs), which could have led to project suspensions and investment cancellations worth tens of millions of dollars across the public and private sectors.

IETA, together with several other stakeholders, urged the CDM Executive Board to provide clarity on this issue and to take the necessary interim measures to ensure that, at a minimum, CDM projects and PoAs can continue to operate and issue CERs until a decision is taken on the issue at COP26. 

The decision by the Board means that clean-energy projects in developing and emerging economies can continue to earn UN-sanctioned offsets by reducing emissions after the Kyoto Protocol’s commitment period ends on 31 December, pending a formal decision at COP26.

While the temporary fix is not perfect, as it still leaves uncertainty until a decision is taken at COP26, it probably is the best outcome we could have hoped for, considering the limits of CDM EB powers and the current challenges, said Stefano De Clara, IETA’s director of international policy. 

“We want to thank the CDM EB Chair, EB members  and the Secretariat for their hard work on this issue and we want to congratulate them on this outcome”.

GENEVA, 15 December – IETA’s GHG Market Report 2020, released today, focuses on long-term climate goals and how to achieve them – kicking off with an introduction by Christiana Figueres on the choices for 2050.

Vision 2050, available online, includes two carbon market scenarios by Baker McKenzie, a piece by Bill Winters on how the voluntary market can play a role in driving ambition and the latest on net-zero pledges from IETA members. The opening session of today’s European Climate Summit will feature a panel discussion about the report with some of this year’s authors – see the event website to sign up for free.

Other highlights include how a swathe of government net-zero pledges is pulling the world closer to meeting the Paris Agreement’s goals, how the EU ETS is being changed for the future, and moving from planning to carbon pricing implementation in developing countries. It also includes a series of mini-profiles of innovations by IETA members which are transforming the way things are done, from sustainable farming to green steel, as well as a look at what policies are needed to deliver on these technologies for tomorrow.

“Decisions taken in this new decade are critical to whether or not we realise our 2050 goals, and this year’s report drills down into some of the issues, such as transparency, accountability and innovation,” says IETA President and CEO Dirk Forrister. “Even despite the chaos and tragedy that COVID-19 has unleashed on the world, governments, business and other stakeholders are doubling down on climate commitments, in recognition that time is running out to make meaningful changes to secure the vision of 2050 we collectively share.”

The report also looks at how to ensure a just transition in a resource-rich economy, focusing on South Africa, and how to successfully fight back against legal challenges to carbon pricing policies.

LONDON, 14 December - IETA welcomes the announcement by the UK government today that it will launch an emissions trading system (ETS) for domestic industry and power generation from January 1 next year.

“The announcement of a new UK ETS is a bold step in the right direction toward climate neutrality," said Adam Berman, director of EU Policy at IETA.

"Choosing a carbon pricing system that can be truly aligned with net-zero sends a strong message that the UK is serious about action on climate change."

"Emissions trading provides multiple options for strengthening and enhancing price signal. The UK ETS will ensure both flexibility for industry and environmental certainty for policymakers.”

Britain left the European Union at the start of 2020 and will leave the EU Emissions Trading System (EU ETS) in less than three weeks. IETA has been one of many entities calling on the UK to implement its own carbon market mechanism.

"The UK has almost two decades worth of experience in emissions trading," Berman said. In choosing an ETS, the government have shown that the UK is willing to build on that experience and lead by example through a market mechanism that is tried and tested as the best route to economy-wide emissions reductions."

The UK has already issued regulations establishing the structure of the UK ETS, including a cap on emissions each year to 2030, and will complete more preparations in the coming days, according to a government statement.

"The UK ETS will ensure that decarbonisation occurs where it is cheapest and most efficient, providing a clear and predictable low-carbon pathway for business," Berman said.

"It also opens up the possibility of linkage to other jurisdictions, which can move the world one step closer to a global carbon pricing system."

"The Government must now consult on how to increase the ambition of the ETS in line with the UK’s enhanced -68% emissions reductions target for 2030."

This is likely to take the form of strengthening the mechanisms of the ETS, and possibly extending the system to new sectors. Although the Government has designed a strong ETS, one crucial element is missing and will be required to meet the revised 2030 target; a supply adjustment mechanism. 

IETA strongly encourages the Government to consider implementing such a mechanism which can reduce surplus allowances if the market becomes oversupplied. This has been shown to be an effective mechanism in the EU’s Emissions Trading System and will be critical to maintaining a robust price signal in the UK ETS.

GENEVA, 9 December - Efforts to increase investments in Natural Climate Solutions (NCS) must recognise the importance of reducing and avoiding emissions from forestry activities, according to a paper published today by the International Emissions Trading Association (IETA).

The paper highlights the invaluable contribution that reducing emissions from deforestation and forest degradation (REDD+) can make to the fight against climate change, alongside efforts to restore and enhance natural ecosystems.

The International Civil Aviation Organisation’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) recently approved two REDD+ standards, Winrock International’s Architecture for REDD+ Transactions (ART) and Verra’s Jurisdictional Nested REDD+ (JNR) framework. This represents the first acceptance of REDD+ standards in a compliance market and is an important moment in the development of REDD+.

At the same time, NCS is becoming an increasingly large component of the voluntary market. In 2019 forestry and land use represented over 50% of the market by value. With initiatives such as the private sector-led Taskforce on Scaling Voluntary Carbon Markets looking to scale the voluntary market by at least 15-fold by 2030, there is an opportunity to direct significant new finance into forest protection.

IETA’s paper calls for carbon markets to channel finance to all pathways that protect, restore and enhance the ecosystems that draw down and store carbon from the atmosphere. “We need to scale up finance to avoid deforestation – especially tropical deforestation – in a way that contributes to sustainable development goals in forested regions,” said Dirk Forrister, IETA’s CEO. 

“The preservation of standing natural forests is essential from both an emissions abatement and removals perspective, while simultaneously protecting against negative climate change impacts, preserving the planet’s biodiversity and supporting the livelihoods and well-being of 1.6 billion forest-dependent peoples globally,” the paper asserts.

The paper points out that many countries have included REDD+ activities as part of their Nationally Determined Contributions to the Paris Agreement, while scenario modelling indicates that dramatic reductions in deforestation are necessary to help achieve the Paris goal of pursuing efforts to limit the temperature increase to 1.5 degrees Celsius.

“Reducing deforestation and the conversion of natural habitats must be prioritised and recognised for its significant climate change mitigation potential in the short to medium term,” said Ellen Lourie, senior policy associate at IETA.

“If forests are allowed to be destroyed, it won’t be possible to recapture and store the lost carbon in new forests quickly enough to meet the Paris goals.”

IETA has also published a fact-sheet on Natural Climate Solutions, which you can find here.

SAN FRANCISCO, 16 November - The International Emissions Trading Association (IETA) has today released a Carbon Neutrality position paper recommending that the cap-and-trade programme in California should become the workhorse of the state’s efforts to reduce carbon emissions. 

The position paper follows comments made by Mary Nichols, Chair of the California Air Resources Board (CARB) last week, in which she said the cap-and-trade programme must go further to drive emissions reductions. 

In its position paper, entitled “Achieving Carbon Neutrality in California Using Cap-and-Trade”, IETA proposes that California extend its cap-and-trade programme and establish caps that decline to net zero by 2045, while expanding compliance flexibilities to ensure that goals can be met at least cost.

The position paper emphasises net emissions technologies — including removals and carbon sequestration — as important strategies to help contain costs. 

The paper argues for a more streamlined approach to linking the California-Quebec programme with other partners, as well as embracing the role of carbon offsets by considering revisions to current rules. 

“We commend California on operating a successful cap-and-trade programme,” said Katie Sullivan, Managing Director at IETA. “To date, the program has largely been used as a backstop to other climate policies. As California aims to achieve carbon neutrality, it is time for the cap-and-trade programme to evolve into the state’s workhorse for achieving its ambitious goals”.   

“An extended cap-and-trade programme aimed at net zero targets is a natural extension of California’s bold leadership on climate change,” said Dirk Forrister, CEO of IETA.

“Cap and trade can meet ambitious climate goals, minimise economic costs and maximise environmental integrity, making it the perfect vehicle for achieving California’s goals efficiently and effectively.”

GENEVA, 2 November - IETA, together with ITN Productions Industry News, are to produce a news-style programme called Blue-Sky Thinking: The race to achieve net zero emissions, which will explore the methods of creating a cleaner future that don’t cost the earth.

You can view a trailer for the programme on IETA's dedicated web page: https://www.ieta.org/Blue-Sky-Thinking/

Climate change is happening at an alarming rate and the need for us to bring about change is evident; rapidly decreasing ice sheets, record temperatures and extreme weather events are just the tip of the iceberg. 

The co-production will raise awareness and develop understanding of market mechanisms to help achieve net zero emissions, in relation to their two branches – offsetting and cap-and-trade.

Anchored by an ITN Productions Industry News presenter, the programme will showcase the latest developments and game-changing initiatives in carbon offsetting schemes, energy-saving innovations, renewable energy and natural climate solutions. 

Themes covered will include carbon pricing, creating financial incentives for countries and companies to reduce emissions; renewable energy schemes from wind farms to tidal energy, and the latest innovations and technologies driving the sector forward. 

The collaboration will combine key industry interviews, sponsored editorial profiles and news reports from leading organisations, thought-leaders, researchers and industry innovators. Blue-Sky Thinking: The race to achieve net zero emissions will launch at the 2021 United Nations Climate Conference (COP26).

“It is encouraging to see governments and corporates around the world commit to achieve net zero emissions in line with the goals of the Paris Agreement,” said Dirk Forrister, CEO of IETA. “Our goal is to demonstrate the power of markets in helping to deliver these net-zero ambitions by enabling investment in climate solutions to speed up and scale up to meet the global challenge.”

Elizabeth Fisher-Robins, Head of ITN Productions Industry News said: “We are proud and excited to be co-producing a programme that will raise awareness of emissions trading and the economic benefits to both business and the environment.  We hope the programme provides a platform to shift public perceptions and encourage long term thinking.” 

For further information, or to participate in the programme, please contact: Georgia Gerstein, Programming Director, Industry News at ITN Productions Industry News georgia.gerstein@itnproductions.com 

About ITN Productions Industry News 

ITN Productions produces bespoke creative and commercial content for broadcasters, businesses, brands, rights holders and digital channels. Industry News forms part of this offering and is a communications tool for leading industry bodies and national associations produced in a broadcast news-style programme format, including interviews, news items and sponsored editorial profiles. For more information visit: www.itnproductions.co.uk

GENEVA, 12 October - Media reports last week indicate that the UK Government may now favour a post-Brexit carbon tax rather than an Emissions Trading System (ETS).

IETA has urged the UK to set up a new national ETS as the most efficient, cost-effective, and transparent mechanism for achieving the UK’s climate targets. It would build on nearly two decades of British leadership in emissions trading, as evidenced in the carbon markets it helped to foster abroad. Carbon markets are now the primary climate policy operating in the EU, California, Canada, South Korea and China.

“The crucial benefit of an ETS is that by placing emissions under a cap it produces a defined and legally binding reduction in greenhouse gas emissions. In contrast, carbon taxes do not offer environmental guarantees, so they put the environmental goal at risk,”  said Adam Berman, EU Policy Director. “That means the UK would be taking a big gamble on whether it will meet its net-zero goal.”

IETA has also raised serious concerns that a carbon tax is not capable of providing certainty of future pricing levels. 

“A carbon tax may look appealing when government seeks to raise revenues, but the environmental reality may disappoint," Berman said.

"Experience shows that because taxes are highly politicised, no Government can provide long-term certainty over future pricing levels. Do we really want to take a chance on a UK carbon tax that might become a political football, putting in jeopardy popular support for carbon pricing amongst the general public?,” he asked.

Although national climate efforts are critical, the proposed carbon tax might have ramifications beyond the UK. Berman noted that “struggling to implement a carbon tax months before the UK hosts COP 26 would send a troubling signal to the international community.”

“The UK remains a vocal proponent for climate action, particularly through market cooperation under Article 6 of the Paris Agreement. By adopting a carbon tax instead of an ETS, the UK would find it harder to provide market linkages with international partners,” Berman added.

“This would weaken its ability to participate in multilateral solutions to climate change, compromise its position as a global leader in the climate sphere, and risk its reputation as a strong advocate for international carbon markets.”

“In sum, a carbon tax fails to guarantee the climate goal, makes life harder for industry at a time of economic crisis, and diminishes UK climate leadership when it is needed the most. Climate action is too important to risk on a tax that is unlikely to succeed at its key task – reducing emissions”, Berman said.

Adam Berman will be appearing before the BEIS Select Committee on Thursday 15th October to stress the case for choosing an ETS over a tax.

GENEVA, 6 October - The CDM Executive Board (EB) has today missed an important opportunity to provide clarity on the future of emissions reductions projects operating under the Clean Development Mechanism (CDM).

At the end of its latest meeting, the EB decided to postpone a decision on requests to renew the crediting period to assure continued operation after 2020. Following CDM EB procedures, three of the body’s members had requested a review of the requests for additional crediting periods. 

The EB was scheduled to decide whether to accept the requests, which would allow registered projects to continue beyond the second commitment period of the Kyoto Protocol that ends this December. 

“Investors and project developers are facing a dire situation whereby they have extreme uncertainty on what will happen to their projects and investments from January 1, 2021,”  said IETA CEO Dirk Forrister. “This in turn will have direct impact on the continuation of projects and creates a heightened risk of project suspensions in various countries”.

Since COVID-19 concerns forced the postponement of COP26 to November 2021, there is currently no opportunity for Parties to the Kyoto Protocol to reach conclusions on how the CDM will operate from January 1, 2021 and, consequently, whether projects and programmes of activities (PoAs) will be able to extend crediting periods and issue certified emission reductions (CERs) credits. 

IETA had urged the EB to adopt temporary measures for current rules to continue without change during 2021, given the extreme circumstance of the COVID-19 pandemic.

“Considering the current exceptional circumstances, we had hoped the EB would do everything within its powers to avoid disruption of the CDM while waiting for a political decision on this issue at COP26,” said Forrister. 

But during its meeting, the CDM EB failed to agree on a remedy and deferred the issue to a future meeting. 

Some members of the CDM EB have questioned whether the CDM can continue to operate and issue credits from January 1, 2020, highlighting technical challenges such as global warming factors and issuance codes, arguing that such a decision is outside the CDM EB mandate. 

“We urge the CDM EB to provide clarity on this issue and to take the necessary interim measures to ensure that, at a minimum, CDM projects and PoAs can continue to operate and issue CERs accordingly until a decision is taken at COP26,” Forrister said.

This uncertainty is happening at a time when interest in voluntary markets is growing. A troubled CDM, coupled with the gap caused by delays in the operationalisation of the Paris Agreement’s Article 6.4 mechanism, could have a detrimental effect on business confidence in the UN crediting mechanisms.

“We’ve been hoping for months to get clarity on how the CDM would operate in the interim,” said Stefano De Clara, IETA’s International Policy Director. “Instead, we are concerned that the signals we are receiving from the EB may go in the opposite direction and cause harm to CDM operations.” 

“This situation is eroding business confidence in the CDM and in future emission reduction mechanisms operated under the UNFCCC,” De Clara added.

BRUSSELS, 18 September - The International Emissions Trading Association (IETA) welcomes and supports the proposals published this week by the European Commission for a more ambitious 2030 emissions reduction target. 

IETA fully agrees with the European Commission’s impact assessment that the EU ETS should be enhanced and expanded to ensure that is fully aligned with the EU’s climate neutrality target. 

To complement the Commission’s publication, IETA is today releasing a report which seeks to help European policymakers to take the necessary steps in the journey to net zero.

“Meeting the EU’s Climate Ambitions: The Evolution of Carbon Pricing to 2050” sets out the case for the expansion and deepening of the use of carbon markets to help achieve the EU’s and indeed the world’s climate goals for 2050.

IETA’s report highlights how swift inclusion of the maritime sector into the EU ETS, and the establishment of separate emissions trading systems for road transport and buildings is necessary to ensure that all sectors are incentivised to move toward net zero.   

Europe should also reintroduce robust removals credits in the EU ETS to encourage technologies and projects that remove, rather than simply reduce, emissions of greenhouse gases, IETA says. 

“IETA is glad to see an acceptance of the vital role that removals will play in reaching net zero as highlighted in the impact assessment,” Adam Berman, Director of EU Policy, said. “IETA fully supports the Commission’s effort to examine how market-based mechanisms can deliver a robust and transparent European framework for carbon removals”.

“An extension in the longer term of the ETS to new sectors would increase the economic efficiency of emissions reductions and would help the EU to achieve its climate objectives,” the IETA report asserts.

Not all sectors have the same cost of abatement, however, and in the first instance Europe should consider setting up separate emissions markets for sectors such as road transport and buildings to ensure that abatement remains cost-effective, the report states.

“The ultimate goal of EU climate policy must be to include all sectors in the EU ETS. The maritime sector is ready for inclusion, but there is a risk in placing road transport and buildings into the EU ETS too soon”, said Berman. “IETA is proposing that stand-alone Emissions Trading Systems are established for the road transport and buildings sectors as a stepping stone to EU ETS inclusion.”

Equally, Europe’s action on emissions must be matched by equivalent efforts among the community of nations, IETA says.

The report notes that “Through working toward the internationalisation of carbon markets, the EU can ensure that the risk of carbon leakage is diminished; protecting the competitiveness of European industries which compete globally”. 

International cooperation has the potential to enable $250 billion per year of global cost reductions to Nationally Defined Contributions (NDCs) by 2030 (according to a recent study prepared by IETA and co-sponsored by Carbon Pricing Leadership Coalition, with the help of researchers and modellers from the University of Maryland) and has the capacity to allow for a more even playing field in relation to competitiveness concerns.

IETA’s report on “Meeting the EU’s Climate Ambitions: The Evolution of Carbon Pricing to 2050” can be downloaded from the IETA website here

SAN FRANCISCO, 17 July - IETA congratulates the state of California on successfully defending its emissions trading system against a federal lawsuit seeking to sever the program’s link with Quebec. 

A US District Court has ruled that the Western Climate Initiative – representing the linked carbon markets of California and Quebec – does not unconstitutionally conflict with the federal government’s foreign policy nor its decision to withdraw from the Paris Agreement.

IETA joined the state of California as a defendant in the case.

“We congratulate the state of California on defending its carefully crafted programme that allows businesses in California and Quebec to cooperate to reduce greenhouse gas emissions through a market system,” said Dirk Forrister, IETA’s CEO. “For businesses in the WCI market, this will add an extra dose of confidence for future investment.”

The state successfully rebutted US Department of Justice (DoJ) arguments that the linkage between the two markets represented an unconstitutional incursion by California into the area of foreign policy, which is the sole preserve of the federal government. 

The Court found that “[The UNFCCC] does not preempt the challenged agreements and regulations because they are entirely consistent with its objectives. . . .  Article 3 of [the UNFCCC] explicitly provides that “policies and measures deal[ing] with climate change should be cost-effective so as to ensure global benefits at the lowest possible cost,” and Article 4 echoes the same.”

California also successfully rejected DoJ assertions that the WCI market and its cross-border linkage may frustrate the US government’s decision to withdraw from the Paris Agreement.

Specifically on Article 6, the court echoed IETA’s reasoning in rejecting the US’s contention that “that California could “facilitate Canada’s participation in the Paris Agreement” by providing Canada with mitigation outcomes to satisfy its contribution obligation…  “Even if Canada were to ask the United States to authorize the use of mitigation outcomes acquired from California, the United States will presumably be unable to authorize the use after November. This is well before Canada’s 2030 contribution target is due, a target for which they intend to “explore” the use of mitigation outcomes. Consequently, California’s cap-and-trade program cannot facilitate Canada’s participation in the Paris Accord in the way the United States alleges.”

The court also found that the cap-and-trade programme does not present a conflict with any Federal foreign policy.

“[T]he United States offers no concrete evidence that California’s cap-and-trade program has interfered with either negotiations for a better deal or the nation’s imminent withdrawal from the Paris Accord. The United States repeatedly suggests California’s program would incentivize other countries to negotiate with California to the exclusion of the federal government. That is a distinct possibility, but the United States offers no evidence that this has happened or will happen.” 

“The WCI programme can now move ahead to achieve ambitious targets at lower costs, enabling participating states and provinces to achieve more together than they could do alone,” said Clayton Munnings, IETA’s West Coast Representative. 

“It’s not just “society” or “the economy” that benefits from this market, it’s real businesses, made up of real people and their jobs and livelihoods that benefit,” he added.

IETA is confident that this ruling may serve as an encouragement for further such linkages between state and provincial markets.

“We hope the Department of Justice will stand down from its legally baseless attack on efficient market mechanisms,” said Nico van Aelstyn of Sheppard Mullin LLP, who represented IETA in the lawsuit. “However, if it does choose to appeal, we are ready to carry the fight to the Court of Appeals, which we are confident will uphold the District Court’s well-reasoned decision.”