Carbon market supporters tout benefits of trading

Carbon market supporters are hoping to sway global negotiators to embrace emissions trading ahead of this year's UN climate talks.

A pair of reports released in conjunction with this week's UN General Assembly make the case that effective implementation of the 2015 Paris climate agreement's carbon market provisions will slash countries' costs for reducing greenhouse gas (GHG) emissions, making it possible to raise ambitions under the accord.

The International Emissions Trading Association (IETA) today released the results of a study showing that effective carbon market linkages could save countries up to $250bn/yr by 2030. Those savings could be used to support an additional 5bn metric tonnes/yr in GHG reductions beyond the 9bn already pledged by countries under the Paris accord.

Those linkages could result in a global average carbon price of about $38/t in 2030, with a total market value of $167bn/yr that year, increasing to $347bn/yr by 2050.

The results show that if countries "work together to drive global market incentives and tap nature's potential, the Paris goals come within reach," IETA chief executive Dirk Forrister said.

IETA prepared the study with the help of researchers from the University of Maryland. It was co-sponsored by the World Bank's Carbon Pricing Leadership Coalition, which has also put out its own market report.

That report, released on 21 September, urges businesses and governments to support strong carbon pricing programs, arguing that they can be designed to address competitiveness concerns that often create resistance to GHG-reduction polices.

The report cites the California carbon market as an example of how regulators can design policies to address industry concerns. The state includes imported electricity in its cap-and-trade program and has designed its allowance allocations to help its trade-exposed industries.

"Carbon pricing has proven to be one of the most effective tools to unlock the potential from the private sector to support innovation and low-carbon growth," said Feike Sijbesma, chief executive of Dutch multinational DSM and co-chair of the coalition's High-Level Commission on Carbon Pricing and Competitiveness.

The reports are meant to push climate negotiators to come to an agreement on the rules for article 6 of the Paris agreement at this year's UN climate talks in Santiago, Chile. Article 6 allows for countries to transfer emissions reductions between each other. This could provide the foundations for a global carbon market.