Breathing New Life into Carbon Markets
March 13, 2013
World Bank’s Partnership for Market Readiness delivering climate solutions
Washington, March 13, 2013 – Faced with the growing scientific evidence on the dangers of climate change, over 30 countries are meeting here today in an attempt to breathe new life into the world’s struggling carbon markets.
From China to Costa Rica, Turkey to South Africa, government officials are sharing new ideas, experiences and plans on domestic emissions trading, carbon taxes, and other innovative market instruments to tackle climate change. These discussions are taking place at the fifth global meeting of the Partnership for Market Readiness (PMR) – a coalition of developed and developing countries that began working together in 2010.
“This growing group of like-minded first movers is building the carbon markets of the future,” said Rachel Kyte, Vice President for Sustainable Development at the World Bank. “With its knowledge and financial support, the PMR supports the assessments, design, and implementation of carbon pricing instruments. A predictable price on carbon will drive investment in clean, green growth, and reveal the real cost of carbon-polluting activities.”
“While the countries in the PMR see that this bottom up approach is working and hope that others will join the fold, at some point the world will need the supporting infrastructure to ensure exchangeability of carbon assets.” Kyte continued. “At least 35 countries, 18 sub-national jurisdictions in the U.S. and Canada, and the seven Chinese cities and provinces – covering about one-third of China’s GDP – will soon be participating in emissions trading systems. Connecting these markets has to be a priority.”
The PMR is made up of a dozen contributing participants, such as the United States, Australia, Japan, the European Commission and other European countries, and 16 implementing countries, including China, Chile, Mexico and Costa Rica, the first four countries to receive grant financing from the PMR in support of their carbon market readiness proposals.
Addressing the meeting today, Wang Shu, Deputy Director of the China National Development and Reform Commission, said, "China is determined to pursue low carbon development. Addressing climate change is an important opportunity for transformation to a green and low carbon economy. We believe market-based instruments, such as carbon emissions trading, is an efficient approach to achieving this. China hopes to develop its own carbon market with the support of the PMR, an experience that will provide other countries with lessons learned."
The PMR provides a platform for developed and developing countries alike to learn from one another’s experiences and explore and implement innovative approaches to greenhouse gas mitigation.
"For Costa Rica, the development of new market instruments and, in particular, the development of a domestic carbon market, is a strategic approach to support local action towards carbon neutrality by 2021,” René Castro Salazar, Costa Rica Minister of Environment and Energy. “This is a voluntary commitment incorporated into our national climate change strategy that seeks to align low-carbon growth and eco-competitiveness by our industry in a post 2020 world.”
At this week’s meeting, the grant recipients each presented their readiness proposals, explaining how they plan to implement specific market-based approaches to reduce greenhouse gas emissions and combat climate change. There is a diversity of approach, with each country choosing its own path, but with the common objective of lowering emissions.
Chile is pursuing a roadmap for an emissions trading system in the energy sector that includes building a greenhouse gas registry system to track emission permits.
China will start the process of building a national emissions trading scheme based on pilots in five cities and two provinces, which are expected to start this year.
Costa Rica is aiming for a carbon-neutral economy by 2021 – a commitment incorporated into a national climate change strategy that seeks to align low-carbon growth and eco-competitiveness. With the help of the PMR, it will work on the infrastructure and demand/supply of a domestic carbon market.
Mexico is pioneering a market mechanism for carbon credits with a robust monitoring and verification system to track emission reductions - an important part of their plan to reduce their emissions by up to 30% by 2020.
The PMR allows representatives from the world’s largest economies and major actors in climate change mitigation to have an open and frank discussion on market-based solutions to tackle climate change.