Full Title: Global Carbon Markets: Solving the Emissions Crisis Before Time Runs Out
Author(s): Elizabeth Curmi, Jason Channell, Ying Qin, Edward L Morse, Eric G Lee, Anthony Yuen, Francesco Martoccia, Igor Cesarec, Adam Phillips
Publisher(s): Citi GPS
Publication Date: October 29, 2021
Full Text: Download Resource
Description (excerpt):
The focus on emissions and climate change is likely to reach new heights this November with the advent of the UN Climate Change Conference (COP26) in Glasgow. But while we might all be aware of the big picture, the rise of “net zero,” and the many climate acronyms popping up daily, do we really know where we are now, what the current plans in place — if delivered upon — would achieve, and what the plan to get to net zero actually is?
We need to find a mechanism whereby global efforts to decarbonize are funded efficiently and equitably. This is where COP26 can help, and in particular “Article 6,” which looks at ways in which countries can work together — either bilaterally, regionally, or indeed globally — to reduce overall emissions.
The world is a mess when it comes to carbon regimes — there are currently 64 carbon pricing systems globally, with another 30+ in development. Thirty of the existing systems are carbon markets, with the remaining 34 carbon tax regimes. Not only is there no agreement on a mechanism, but the prices within these regimes vary from the meaningless $0.10/tonne to an eye-watering $142.40/tonne — against a price widely seen as necessary now for Paris-alignment of $40-$80/tonne. This fragmented approach is clearly inefficient, and evidence tells us that so far, it is proving ineffective at a global level. Accordingly, to achieve real progress, we must find some way of integrating these individual regimes into one globally-fungible system. There are essentially four ways we could achieve this, using one, or a combination, of the methods mentioned below.