Even as the outcome of the international climate discussions remains unclear, policymakers in a growing number of countries are adopting and implementing market-based measures to limit carbon pollution. Programs already in effect include the European Union Emissions Trading System (EU ETS), the Australian Emissions Trading System (carbon pricing and offsets market in 2012, full emissions trading in 2015), the New Zealand Emissions Trading System (NZ ETS), the Regional Greenhouse Gas Initiative (RGGI) in the Northeastern United States, the California Emissions Trading System (CA ETS, which conducted its first auction in November 2012 for the 2013 first year of coverage), and the Tokyo Emissions Trading System (Tokyo ETS). Others stand on the verge of commencing operations, including Québec (2013) and the Republic of Korea (2015). Sub-national jurisdictions that have considered, or are now examining, emissions trading legislation or regulations as part of a national carbon trading pilot program include Chinese provinces (Hubei and Guangdong) and cities (Beijing, Tianjin, Shanghai, Chongqing, and Shenzhen).
Each of these programs contains distinguishing features. For each program already in place, we outline the following key design elements and important issues:
Cap/Target for emissions reductions
Scope and coverage of the programs
Auction format
Allowance distribution
Flexibility provisions
Volatility and cost containment mechanisms
Competitiveness and anti-leakage provisions
Market regulation and oversight
Complementary and supplementary measures
Economic projections; and
Results to date
Following this, we provide a brief analysis of the unique features of each program, as well as challenges faced in the development, implementation, and operation of each.
For programs under development we provide a brief overview of the history of the country’s actions on climate, an update on progress, and a snapshot of the market oversight and regulatory context. Finally, we reflect on the ongoing challenges for each program, and its unique features.
This website is intended to provide a tool for readily understanding the variety of approaches now being taken, facilitating action by policymakers on this critically important issue.