By Mathew Carr
Dec. 15, 2020 — LONDON: Seven carbon markets, existing and possible, could link and cover most of the world’s emissions, according to a key China academic.
China, the U.S., the EU, Russia, South Africa, Korea and Southeast Asia could link carbon markets, providing an incentive to reduce climate-damaging emissions, said Xiliang Zhang of the Institute of Energy, Environment & Economy at Tsinghua University.
The tokenisation of commodities and products, blockchain may help spur linking of carbon markets, Zhang told the online European Climate Summit.
Speakers on the summit panel discussing carbon-market linking expressed doubt linkages were likely anytime soon. Australia and the EU had a failed attempt at linking. A link between the EU and Switzerland took years. China’s planned domestic carbon market is years behind schedule and the U.S. does not even have plans for a national market.
The U.K. is leaving the EU carbon market at the end of this month, shrinking it and probably reducing trading liquidity.
The U.K. may link with Europe’s program or it might set out its own global cooperation with other countries, after Brexit. Carbon market linkages don’t need to be struck between nations in close geographical proximity, because trading is done electronically. However rules and the ambition of emission-reduction targets would probably need to be similar.
“I personally think that it would be so much easier for the U.K. to join the EU emissions trading system, which they know and which they have institutionalised than any other ETS,” said Silke Karcher, head of division, EU Climate and Energy Policy, European Climate Initiative, carbon markets, at the German Ministry for the Environment. “I find it hard to imagine they would try anything else, but who knows?”
For summit website:
(Updates with charts, with context, with German official Tuesday afternoon, more to come)