Clima East at COP19: Notes from our Key Expert (4)

Emission Trading Schemes worldwide: where do we stand, what lies ahead?

This was the question addressed by a COP19 side event of the same title on 18th November 2013, organised by the International Carbon Action Partnership (ICAP). The event presented latest developments in selected carbon trading schemes with panellists from Canada, the EU and China, as well as South Korea and Kazakhstan, and discussed key features and trends in how these are developing (see also for fuller coverage).

The EU ETS is the biggest currently working emissions trading system, but in the light of developments globally and many countries – including China which is contemplating introduction of the national emission trading system – this may change. Given the long history of the ETS, it provides several important lessons that can be useful to policymakers planning emission trading schemes in other countries/regions. The participants agreed that a ‘learning by doing’ approach is prevalent globally. However, the preparatory phase may be of different length: up to 8 years in Australia and 2 years in Kazakhstan.

Qian Guoqiang from Sinocarbon outlined the state of play in carbon market development in China. China initially leaned towards carbon tax, not carbon trading, as a taxation based approach appeared more suited to the economic system in China, but it changed its attitude to emissions trading after Copenhagen in 2009. Since then private sector involvement in climate policy has become a fact. China is taking domestic action, with a range of pilot ETS projects, low carbon development projects and measures to create low carbon cities, and is drawing on the experience of CDM, looking at the examples of EU ETS and NZ emission trading. There are currently 7 pilot projects, of which some are to start soon. The design of the Chinese CCR scheme draws on the lessons learned from CDM.

Quebec’s experience in developing ETS was another example discussed during the event, representing a sub-national approach. It was designed drawing on the lessons and know-how from the EU ETS and it was influenced by the plan to link with the Californian emissions trading scheme, which is scheduled for 1 January 2014.

The participants stressed that market based approaches are spreading worldwide. Not only emissions trading systems are being contemplated or are under development in many countries, but the 2015 agreement will most likely bring a Framework for Various Approaches.

The message was: the carbon market is here to stay and will play an increasingly greater role on global actions on climate change.