Linking emissions trading schemes "wave of future” - Ieta
London, 15 January (Argus) — Several countries are exploring a future linkage of their emissions trading schemes (ETS), which will promote greater ambition and economic efficiency, International Emissions Trading Association (Ieta) president and chief executive Dirk Forrister told Argus.
“Linking is the wave of the future, because it feels like the international policy regime is changing from its more top-down structure of the Kyoto to a system that is more of an enabling international policy structure,” he said.
Australia is currently in talks with California on a potential linkage and there is a summit this week at the University of California, Davis, where delegates will examine this topic. “It will be interesting to see if the idea gets any traction there,” Forrister said. “My suspicion is that when Australia looks at the California linkage, they will have to have a conversation with Europe to see if the systems are compatible enough. It is a hugely important topic for the market to stay closely attuned to.” Australia and the EU have proposed to link their trading schemes from 1 July 2015, with a full link to be established by 1 July 2018.
China, with its seven pilot trading schemes, is likely to ultimately reach out to Europe and Australia for a linkage after its domestic system is established, Forrister said. China's domestic scheme will be so large that it can operate for a long time without an external linkage, by gaining economies of scale within the country, he noted. “They have a huge potential for various costs of reductions across different provinces and sectors. Ultimately though, I think they will reach out for linkages.” The prospect of future linking does guide the country's thoughts on establishing a national system, Forrister added.
Meanwhile, other countries are increasingly turning towards an ETS. There are reports of progress in Chile, Turkey and Mexico, which are all part of the Partnership for Market Readiness (PMR) — a World Bank initiative aimed at helping developing countries put in place market instruments to mitigate greenhouse gas emissions. As countries' domestic ETS increasingly crop up, it lays the groundwork for international climate negotiations, Forrister said.
“We are in an era where international negotiations will plod away until the 2015 [global climate agreement] decision date, and the real action is on the ground as these programmes start to take shape,” he said. “These systems are quite important not just for what they mean on the ground in controlling emissions and stimulating market activity, but they will also inform national negotiating positions … and pave the way for a future international agreement.”
As part of the Durban platform for enhanced action (ADP), countries at the UN climate change convention in 2015 must sign an international climate deal, to be implemented by 2020. “I think the 2015 agreement will be an international enabling framework more than a restrictive framework,” Forrister said.
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