Apresentação intitulada "Mercados internacionais para reduções de emissões de carbono: oportunidades e desafios", proferida em inglês por Ruben Lubowski: Economista-Chefe de Recursos Naturais, EDF, no Seminário Internacional Oportunidades de Negócios para uma Economia Rural Sustentável:A Contribuição das Florestas e da Agricultura, realizado nos dias 14 e 15 de maio de 2019.

1. International Markets for Carbon Emissions
Reductions: Opportunities and Challenges
Ruben Lubowski, Chief Natural Resource Economist
International Seminar: Business Opportunities
for a Sustainable Rural Economy:
Contribution of Forests and Agriculture
IPEA, Brasilia
May 14, 2019

2. Source: EDF based on Enerdata/POLES, IIASA, FAO
The Ambition Gap:
Paris Agreement Pledges in Perspective
Business-as-usual
(BAU) global
emissions
Global current Paris
pledges (Nationally
Determined
Contributions;
NDCs)
Global ambition
consistent with 2° C
degrees
Global intermediate
ambition scenario

3. Total emissions reductions from 2020-2035 in billion tonnes CO2e
Source: EDF
Global carbon markets can enable almost double the emissions
reductions at the same total cost as current policies

4. Total emissions reductions from 2020-2035 in billion tonnes CO2e
Source: EDF
Global carbon markets can enable almost double the emissions
reductions at the same total cost as current policies

5. Total emissions reductions from 2020-2035 in billion tonnes CO2e
Source: EDF
Global carbon markets can enable almost double the emissions
reductions at the same total cost as current policies

6. Source: State and Trends of Carbon Pricing 2018, World Bank
Carbon pricing covers about 19% of world emissions

7. Marshall Islands
New Zealand
NDC Submitted
Singapore
NDC includes the use of
International markets
San Marino
Trinidad and Tobago
Comoros
Grenada
Country will consider
using markets
Seychelles
Kiribati
Mauritius
Maldives
Barbados
Tuvalu
Cape Verde
Dominica
Sao Tome
and Principe
Solomon Island
Monaco
Samoa
NDC Not Submitted
Antigua and Barbuda
Fiji
Nauru
Cook Islands
St Lucia
St. Vincent and the
Grenadines
Micronesia
Vanuatu
Palau
Source: IETA/EDF “Carbon Pricing: The Paris Agreement’s Key Ingredient,” April 2016
More than 90 countries included an explicit mention of
markets in their Paris Pledges (Nationally Determined
Contributions; NDCs).

8. Carbon Pricing Systems Including Domestic Forestry and/or
Land Use
Source: Forest Trends. 2017.

9. 9
Key regulated markets are considering accepting protocols for
international emissions reduction credits from forest carbon:
Reducing Emissions from Deforestation and forest Degradation
(REDD+)

10. Declining cap
California cap-and-trade program

11. Source: CORSIA/ICAO, adapted by EDF
International Civil Aviation Organization
(ICAO): Market-based measure (CORSIA)

12. CORSIA: Demand for
biofuels and offsets
~2.5-3 BILLION tCO2
(2021-2035)
➢ Estimated $6-8 billion / year potential offset market, depending on penetration of biofuels
Source: CORSIA/ICAO, adapted by EDF
International Civil Aviation Organization
(ICAO): Market-based measure (CORSIA)

13. CORSIA: Demand for
biofuels and offsets
~2.5-3 BILLION tCO2
(2021-2035)
➢ Estimated $6-8 billion / year potential offset market, depending on penetration of biofuels
Source: CORSIA/ICAO, adapted by EDF
International Civil Aviation Organization
(ICAO): Market-based measure (CORSIA)

14. Potential growth of international forest
carbon market
Source: EDF estimates
~130-200 MtCO2/year emissions
reductions, 2021-2035
~8 MtCO2/year emissions
reductions, 2020
~600-2,000 MtCO2/year
emissions reductions, 2025
$300 million,
2019-2022

15. https://www.edf.org/sites/default/files/documents/CORSIA%20Carbon%20Markets%20Scenarios_0.pdf
Estimated Carbon Prices Consistent with Paris Agreement
Modelled carbon price from gradually evolving
global market assuming the implementation of the
Paris Agreement
Source: EDF analysis. Piris-Cabezas et al. 2018

16. A
o Surplus of 6,981 million tons beyond the multiyear budget or cap.
Brazil: Potential surplus cost-effective reductions
beyond NDC given global market price scenario
16
Source: EDF; Piris-Cabezas et al. 2018

17. Summary: Revenues and costs for Brazil of
implementing NDC
REVENUESCOSTS
• The international price where Brazil “breaks even” on its NDC is estimated at $6.5 in 2016 rising
to $12.9 in 2030, below projected values and existing market prices.
• Source: EDF; Piris-Cabezas, Lubowski et al. 2018)

18. Key Findings
• Global use of carbon markets could allow nearly double climate
ambition relative to current NDCs at the same total cost.
– Significant increases in ambition could still be achieved even with limited
international emission trading.
• Reducing deforestation is a key driver (~1/2) of greater
ambition.
• Brazil has comparative advantage in emissions reductions from a
global perspective, with significant potential to overachieve NDC.
– If Brazil could valorize additional economy-wide reductions beyond NDC at
forecasted carbon prices, this could cover or even exceed program costs.
• Priority to ensure the development of well-designed, high-
integrity international market approaches.

19. Thank you!
Ruben Lubowski
rlubowski@edf.org

20. CORSIA under International Civil Aviation
Organization (ICAO)
• 1996: UNFCCC tries to figure out how to tackle “international
bunkers” (ships & aircraft)
• 1997: Kyoto Protocol gives lead to ICAO, IMO
• 2016: ICAO Assembly adopts the “Carbon Offsetting and
Reduction Scheme for International Aviation” (CORSIA)
– help international aviation “carbon neutral growth from
2020” (limit net emissions to 2020 levels)
– Dates: January 1, 2021-December 31, 2035
– Airlines to purchase and cancel emissions units that meet
Emissions Units Criteria (EUC)

21. Modelled Carbon Prices under Alternative Scenarios
Source: Piris-Cabezas, Lubowski, Leslie 2018

22. Carbon Pricing of the Americas (CPA) initiative
• Launched in Paris, December 2017
• Canada, Colombia, Costa Rica, Chile and Mexico
• Governors of California, Washington and the Premiers of Alberta,
British Columbia, Nova Scotia, Ontario and Quebec
• Implement carbon pricing as a central economic and environmental
policy instrument for ambitious climate change action.
– Create platform for cooperation
– Strengthen MRV and explore developing common standards
– Share best practices, build capacities, engage stakeholders