Countries will need to raise their ambitions if the objective of limiting global warming to less than 2 degrees, and promoting efforts towards avoiding 1.5 degrees is to be met. Carbon markets have the potential to play a significant role. To date, some 40 countries and 23 cities have some level of trading systems in place covering some 12 % of global emissions. The Paris accord commits signature countries to achieve 25% coverage of emissions by 2020 with a doubling again by 2030.The opening of China’s national trade systems in 2017 will further build momentum in the global carbon markets.
However, in some jurisdictions, carbon market schemes are still likely to be politically impossible for some time to come. And not all carbon markets are currently pricing emissions anywhere near high enough to accurately reflect a >1.5-2C commitments. In the US, for example, domestic rules on coal-fired power emissions have been one of the most effective regulatory measures. Carbon taxes, car fleet standards, industrial efficiency requirements are just a few of the alternatives to carbon markets that governments around the world have introduced, whether or not they have explicitly targeted greenhouse gas emissions with those measures. How can investors, financiers and companies prepare for a 1.5 - 2C world when the market signal is weak or non-existent?
- Will carbon markets expand at scale?
- Are carbon markets the most effective way of meeting emissions targets and creating incentives to invest in low-carbon technology and infrastructure? What is the evidence that they change behaviours and contribute a real dent in emissions?
- What are the prospects for China’s carbon markets? Will China show the world how climate trading is done?
- What are the lessons from the experiences of pioneering local, regional and national/intra-national carbon markets (e.g. EU ETS, California|?). How are concerns regarding the integrity of markets and carbon leakage be met?
- What would be ‘best in class’ emissions trading scheme look like?
- Will we see a global carbon price and if so, what could be the possible timescale?
Gareth Phillips, Chief Climate and Green Officer, African Development Bank (AfDB)
Dirk Forrister, President and CEO, International Emissions Trading Association
Nathaniel Keohane, Vice President of Global Climate, Environmental Defense Fund