“Even as the first generation of the carbon market stumbles…it is advancement at the country level that gives confidence,”
Multiple systems feature novel designs, like pricing stabilization making them flexible and adjustable to changing economic situations that may have been unforeseen when they were created. The current glut of allowances and low prices in the EU ETS has been attributed to system inflexibility to handle reduced allocation demand following the economic recession.
These emerging schemes could make a massive impact on global emissions. As of 2014, the countries with functioning systems or carbon pricing mechanisms scheduled to start within the next few years. The World Bank report highlights cap and trade systems in the EU, California, Kazakhstan, New Zealand, Quebec, the Regional Greenhouse Gas Initiative, and regional markets in Japan, as well as South Korea’s developing system. In addition, carbon taxes are cited in Australia, British Columbia, Denmark, Finland, Ireland, Norway, South Africa, Sweden, Switzerland, and the United Kingdom.
Even more promising, China’s new fledgling system has begun pilot programs nationally. “If China, Brazil, Chile, and the other developing economies adopt these new mechanisms, carbon pricing initiatives could cover a large portion of total global emissions,” - says Ian Adlington
The Bank analysts also note the growing trend of existing or scheduled systems expanding coverage of domestic emissions, with Australia and Korea now targeting 60% coverage, California eyeing 85% coverage, and New Zealand targeting 100% coverage within a few years.
“There may not be a one-size-fits-
Ultimately, it all comes down to climate change, the ability to fund our transition to a sustainable future, and our inability to come to international agreement on climate policy.”
Ian Adlington finally added “that climate change presents serious consequences to the economic outlook of the global economy, and the carbon emissions put us on the pathway to a devastating 3.5-4 degree Celsius temperature rise by 2100. Provided enough carbon pricing systems are operating or scheduled by the next United Nations climate meetings, the power of international carbon markets as an economic and planetary tool will be too tough to overlook.”