Carbon Pricing and Emissions Trading a Global Review

Carbon trading is increasing around the world as levels of atmospheric carbon are about to move past the 400 parts per million threshold. The European Union has been operating the world’s biggest emissions market since 2005. In North America there is the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI). According to Thomson Reuters Point Carbon the North America carbon trading market doubled in 2012 with the inauguration of carbon markets in California and Quebec. In 2012, the volume of permits and credits traded was estimated to be 179 million tons, valued at $782 million.

Although six US states (New Mexico, Arizona, Washington, Oregon, Montana and Utah) abandoned the WCI, five Canadian provinces joined California to form the biggest North American carbon trading market by value. In 2012 the WCI distributed 24 million metric tons of allowances in California and Quebec.

As well as pursuing participating in the WCI, California has been actively creating its own cap and trade program.

Emissions markets did not appear to be have been significantly impacted by global economic woes. In 2012, they traded at volumes 19 percent higher than in 2010, although the value was up only 4 percent. Approximately 8 Gt CO2e were traded in compliance markets, compared to 7 Gt in 2010.

“The Critical Decade: Global Action Building on Climate Change“ presents an overview of progress in international action on climate change since August 2012. The report also reviews carbon pricing and emissions trading schemes around the world.

The number of countries pricing carbon is increasing, with four new schemes starting so far this year. Emissions trading schemes are now operating in 35 countries and 13 states, provinces and cities. One of the countries that adopted a carbon trading scheme in 2012 is South Korea. While New Zealand started emissions trading in 2009 and Australia is scheduled to come online with their own scheme in 2015.

These 48 schemes, together with the 7 Chinese schemes, are expected to involve 880 million people and about 20 percent of global emissions.

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