What prospects for the global carbon market after COP26?

Taking place only a few weeks after the UN Climate Conference in Glasgow (COP26), this FSR Debate will review the outcome of the conference and discuss the implications of the progress made, or lack thereof, for the development of the global carbon market.

Background

Parties to the Paris Agreement can use different instruments for trading emissions reductions at the international level through several mechanisms established by Article 6 of the Paris Agreement. Article 6.2 allows countries to develop decentralised cooperative approaches under which they could trade mitigation units, so-called Internationally Transferable Mitigation Outcomes (ITMOs), to reach their own Nationally Determined Contributions (NDCs). Article 6.4 opens the possibility to set up a new UN centralised mechanism to trade emissions reduction credits related to specific sustainable development projects. Article 6 also provides the opportunity further to account for international cooperation and integration of non-market approaches.

The development of Article 6-compatible carbon markets could allow countries to achieve net-zero targets with greater economic efficiency, increased economies of scale, and further financial cooperation. According to a recent study from the International Emissions Trading Association and the University of Maryland, the market value of financial flows between countries could potentially exceed $1 trillion per year in 2050.

The part of the Paris Agreement Rulebook meant to implement these Article 6 provisions has just been agreed at the COP26 in Glasgow. However, many questions, to be discussed in the FSR Debate, remain. What are the prospects for international carbon markets? Will this new Rulebook stimulate the possibility of moving toward a global carbon market? Or does it contain loopholes that could harm the environmental integrity of the mechanisms? What could governments do to ignite the global carbon market?

Programme

The event will be moderated by:

Simone Borghesi | Florence School of Regulation, EUI

Alberto Pototschnig | Florence School of Regulation, EUI

Introduction to the Debate and Opening Presentations

14.00 – 14.05   Introduction to the Debate

Ilaria Conti | Florence School of Regulation, EUI

14.05 – 14.15   Opening address

Martin Hession | DG Climate Action, European Commission

14.15 – 14.25   ETS Alignment: possible reforms for integration

Stefano Verde | Florence School of Regulation, EUI

Panel Discussion: Introductory Remarks, Polls and Comments

14.25 – 14.50  Introductory remarks from the panellists

Kelley Kizzier | Environmental Defense Fund

Luca Lo Re | International Energy Agency

Billy Pizer | Resources For Future

14.50 – 14.55   Polls

14.55 – 15.20   Comments on the outcome of the poll and Q&A from the audience

Panellists

15.20 – 15.30   Concluding remarks

Jos Delbeke | School of Transnational Governance, EUI

#FSRDebates

Hosts: Leigh Hancher and Alberto Pototschnig (FSR)

The focus of this series is on recent court cases, regulatory decisions, EU legislation, or public consultations to be discussed by a panel of experts.

This event will be live-streamed and recorded. Highlights and presentations will be made available online.

This event is organised under the framework of the LIFE DICET project co-financed by the EU LIFE Programme of the European Commission.