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3 Signs We’re Entering a Golden Age for Carbon Markets

krupp, fred, EDFThis is an adaptation of an essay by Fred Krupp and Nat Keohane for the International Emissions Trading Association’s Greenhouse Gas Market 2015/2016 report

There was a time when market-based approaches seemed to fall off the radar in discussions of climate policy, but carbon markets are back.

Well-designed emission trading systems offer the combination of flexibility, incentives and guaranteed results that help polluters meet their targets – while leaving it up to the market to figure out the best way to meet them, driving costs down.

This is why so many companies are staunch supporters of emissions trading, and why national and international efforts are taking off.

Here are three indications  we may be entering a golden age for carbon markets and what it means for COP21, the international climate talks that begin in Paris later this month.

1. Carbon markets are going global

Climate progress in the United States and China is changing the global dynamic.

Gone are the days when the two largest emitters blame each other for inaction, and their bilateral progress is inspiring commitments around the world. All told, cap-and-trade programs are in place in more than 50 jurisdictions worldwide that are home to nearly a billion people.

Quebec and California have linked their carbon markets, creating North America’s largest cap-and-trade system, becoming the first example of subnational jurisdictions in different countries launching a joint market. And more programs are in the works.

Ontario, Canada’s most populous province and home to a significant manufacturing base, is developing a cap-and-trade program to launch by 2017 and link to California and Quebec’s market by 2018. Having the largest U.S. state and Canadian province in a formal, linked carbon market will help lay the foundation for further carbon market collaboration in North America and beyond.

China, meanwhile, is set to open a national carbon market in 2017, the world’s largest.

2. Next: International aviation and tropical forests

One of the most exciting opportunities is in international aviation.

The International Civil Aviation Organization (ICAO) is developing a market-based mechanism for consideration at its next Triennial Assembly in 2016 to help the sector meet its stated commitments to carbon-neutral growth from 2020 and a 50-percent cut by 2050.

That would cap emissions from a global sector that accounts for roughly 2 percent of carbon emissions, and growing fast, and would set a powerful precedent for international cooperation on climate change.

Fred Krupp
Fred Krupp is president of Environmental Defense Fund. In his 30 years as head of EDF, Krupp has overseen the growth of EDF from a small nonprofit with a budget of $3 million to a recognized worldwide leader in the environmental movement. Under his direction, EDF’s full-time staff has increased from 50 to 350, membership has expanded from 40,000 to over one million and new offices have opened across America and in China and Mexico.
 
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One thought on “3 Signs We’re Entering a Golden Age for Carbon Markets

  1. And there is so much more that can yet be done to battle the 3 elements of Climate Change.
    1) Increased natural gas energy efficiency = Reduce Global Warming.
    2) Increased natural gas energy efficiency = Reduced CO2 Emissions
    3) Increased natural gas energy efficiency = Water Conservation

    Natural gas maybe the Clean Combusting fossil fuel but every natural gas appliance has a chimney. Recover and utilize the heat energy in the exhaust and the other items will happen.

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