Carbon Markets in the Developing World


Annual global emissions are now greater than 34 billion tons. Without action, the earth could be four degrees Celsius warmer by the end of the century than it was at the start of the industrial revolution. This increase in temperature would have hazardous effects on agriculture, water security, and sea level rise throughout the world.

Governments have adopted a number of means to reduce greenhouse gas (GHG) emissions including regulations, subsidies, taxes performance standards, international treaties, and emission trading schemes (ETS). Taxation and ETS increase the cost of carbon, creating an incentive to reduce GHG emissions.

This process can be seen in China, Chile and more than 12 countries throughout the world where carbon markets are developing.

China’s government has committed to decreasing its carbon emissions per unit of GDP by at least 40 percent by 2020.  To date, five cities and two provinces in China are developing emissions trading systems with the intent to create a national carbon market.

In July 2012, Australia introduced a carbon price, and its biggest polluters are now required to report their emissions and pay $23/ metric tonne of carbon pollution.

Since 2010, Tokyo has been employing a cap-and-trade system, and by 2012, GHG emissions had been reduced by 23 percent.

Last week, the Partnership for Market Readiness (PMR), a coalition of more than 30 developed and developing countries met to determine future market instruments that will reduce GHG emissions cost effectively. PMR is composed of 12 countries already contributing and 16 implementing countries.

PMR provides a platform for the 16 implementing countries to learn from contributing countries experience. Together, all countries involved can explore innovative approaches to GHG emissions.

“These countries, learning from past lessons, are exploring and implementing markets-based approaches to tackling climate change,” said Xueman Wang, Team Leader of the PMR. “Their success will be crucial to scaling up mitigation efforts.”

The implementing countries developed proposals to get grant funding.   At last week’s meeting, officials from China, Chile, Costa Rica, and Mexico presented their proposals; explaining their plans to implement market-based approaches to reduce GHG emissions.

Chile is establishing an emissions trading system in its energy sector and creating a greenhouse gas registry system. Costa Rica aims to have a carbon-neutral economy as of 2021 through its national plan to align low-carbon growth and eco-competitiveness. Mexico is creating market-based strategies to decrease up to 30 percent of its emissions by 2020.

– Kasey Beduhn

Source: The World Bank, The Ecologist
Photo: Flickr



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