Simone Ruiz - Carbon markets

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Simone Ruiz's presentation at the Climate Action Conference in Brussels, 25-27 October 2010

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Simone Ruiz - Carbon markets

  1. 1. Climate Action Conference Carbon markets 27 October 2010 Simone Ruiz
  2. 2. 2009 Global Carbon Market Volumes 2008 2009 MtCO2e US$m MtCO2e US$m EUETS 3’093 100’526 6’326 118’474 Others 162 692 880 2’346 AAUs 23 276 155 2’008 Prim CDM 404 6’511 211 2’678 JI 25 367 26 354 Vol Mkt 57 419 46 338 Secondary 1’072 26’277 1055 17’543 TOTAL 4’836 135’066 8’700 143’735 Source World Bank
  3. 3. EU-ETS : eight checks for success or failure 1. Have we avoided (another) embarrassingly obvious collapse? 2. Does the system actually physically work? 3. Does it have strong continuing political support? 4. Is it causing economic damage? 5. Is it actually reducing emissions? 6. Is it producing an effective price signal? 7. Specifically, is its price signal affecting investment patterns? 8. Is it helping the world out of a global problem?
  4. 4. Fixing difficulties Overallocation Carbon leakage Fraud … EU-wide allocation Full auctioning power sector Free allocation (benchmarks) Compensation indirect costs Single platform for auctioning Enhanced security in registries
  5. 5. Continued political support • RECALLS the crucial importance of carbon markets, including cap-and-trade systems, for achieving global mitigation objectives in a cost- efficient manner and for driving low-carbon investments while contributing to sustainable development; Council conclusions, March 2010 EU Commission, 2005
  6. 6. 6 Fifth IETA Survey of GHG Market Sentiment - International Emissions Trading Association Preferred instrument for business: Confidence in the market as the most effective driver of low carbon investment remains, but it will not work on its own
  7. 7. Lessons learned • Emissions trading does what it says on the packet • Price will go down when it should • Set up the parameters right and a substantial market will appear • Scarcity needed – banking helps • Strong central allocation control needed • Not a substitute for investment targets • Competitiveness a potent political issue even without evidence • Coherence with other policies not easy to achieve
  8. 8. Thank you ruiz@ieta.org www.ieta.org

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