Earth logo

Carbon Market observation: four suggestions on the Construction of Global carbon Trading system.

climate change.

By testPublished 3 years ago 3 min read

On May 5th, carbon Market Watch (Carbon Market Watch) released two policy briefs that investigate the successes and failures of previous linked carbon markets, assess the compatibility between the European Union emissions trading system (EU ETS) and carbon markets in other jurisdictions, and make recommendations for future links between EU ETS and other carbon markets.

The first report, entitled "Building a global carbon trading market-linking the prospects of the EU emissions trading system and other carbon markets" (Towards a Global Carbon Market-Risks of Linking the EU ETS to Other Carbon Markets), points out that linking different carbon markets and eventually building a global carbon market is seen as an integral part of the future international climate regime, as global carbon markets can increase climate change mitigation options.

Reduce the cost of reducing emissions and strengthen the climate ambitions of countries around the world.

An analysis of the seven existing carbon markets shows that the experience of linked carbon markets in California in the United States and Quebec in Canada can provide valuable experience for links to any future carbon market; other carbon markets have learned the lessons of EU ETS, especially how to avoid the accumulation of a large number of redundant quotas to drive carbon prices to very low levels.

The report provides EU ETS with lessons to learn from: 1 the positive experience of applying California-Quebec carbon market links.

First, carbon markets in EU ETS and other jurisdictions can be linked only if there is mutual trust and close cooperation.

The link requires continuous coordination of climate standards in each jurisdiction, which means that jurisdictions need to work closely together on potential changes in their regulatory framework.

Second, the introduction of auxiliary climate policies for carbon pricing allows EU governments to maintain a certain degree of control over climate standards after the link.

2 permanently solve the problem of redundancy of emission quotas in EU ETS and other carbon markets by taking measures similar to the California-Quebec carbon market, such as setting limits on the amount of redundant quotas that participants can own and reserve for future use, or establishing a mechanism to reduce the upper limit of redundant quotas for reserves.

The second report, entitled "Building a global carbon trading market-the risk of linking the EU emissions trading system and other carbon markets" (Towards a Global Carbon Market-Prospect for Linking the EU ETS to Other Carbon Markets), points out that the risks of linking EU ETS to other carbon markets are: 1 linking carbon markets leads to lower costs of emission reduction, but without careful design, these reduced costs may eventually reduce the total amount of emission reductions.

Reduce domestic investment and efficiency and lead to the loss of public funds.

There are also concerns that linking EU ETS to foreign carbon markets will allow foreign emissions quotas to enter the EU's carbon market, undermining the EU's goal of reducing emissions by at least 40 per cent by 2030 (compared with 1990); 3 current regulations do not allow the European Parliament to participate in link negotiations and do not provide access to key documents to the public.

The report makes the following recommendations: 1 while deciding to link EU ETS with other carbon markets, the EU's emission reduction targets should be raised.

2 the European Union is about to announce a proposal to modify the carbon market in the third quarter of 2015, which must provide safeguards for all decisions linking EU ETS and other carbon markets, such as assessing climate ambitions for fair share in different jurisdictions, including airline operators in EU ETS, excluding international compensation, ensuring that the price of emission quotas is similar and the quota allocation method is reliable.

(3) the proposed changes to EU ETS and should allow public review of the linking scheme and rules, including strengthening the role of the European Parliament and improving the transparency and public accessibility of relevant documents; 4 the EU is negotiating with Switzerland to link the two carbon markets, which should set a precedent for future links to other carbon markets and avoid endangering EU ETS revisions.

Climate

About the Creator

test

Reader insights

Be the first to share your insights about this piece.

How does it work?

Add your insights

Comments

There are no comments for this story

Be the first to respond and start the conversation.

Sign in to comment

    Find us on social media

    Miscellaneous links

    • Explore
    • Contact
    • Privacy Policy
    • Terms of Use
    • Support

    © 2026 Creatd, Inc. All Rights Reserved.