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The Paris 2015 climate agreement could “pave the way” for the development of global, interconnected carbon emissions markets, said 80% of respondents in a recent survey by the International Emissions Trading Association.
The annual survey, conducted by PwC, found that the majority of IETA members believe carbon emissions markets will play a role in the international climate change deal to be decided next year.
UN negotiations are currently underway to develop the new agreement which will be adopted in 2015, at the Paris climate conference, for implementation in 2020.
“The role for carbon markets – and linked markets – in fighting climate change is being increasingly recognised by policymakers around the world, from China to Europe to California,” said IETA president and CEO Dirk Forrister in a statement alongside the survey results.
Forrister said that despite a tumultuous few years in European emissions trade through the ETS and “backward steps” in Australia, the benefits of emissions trading continues to drive interest globally.
The expected future price of ETS allowances continued to fall in this year’s survey but the rate of decline is slowing, suggesting that some participants see the downwards trend stabilizing, the report said.
Earlier this year the EU implemented its “backloading” scheme which delays the sale of nine million EU allowances (EUAs) through to 2016 in a bid to limit the chronic oversupply of allowances which has caused pricing levels to crash.
But the survey respondents believe that further reform is needed.
“Last year’s survey found that 90% of respondents favoured reforms to the EU ETS to reduce the allowance surplus – and a similar number this year still think further reforms are needed,” said PwC partner Jon Williams.
Following on from its backloading regime the European Commission has proposed a ‘market stability reserve’, which intends to gradually tackle the accumulated surplus of carbon allowances by removing some from the market and temporarily placing them in a reserve.
But only 27% of respondents believe this will be able to stimulate sufficient low-carbon investment, while 47% believe an ambitious 2030 emissions reduction target is the most effective option.
Only 4% of respondents believe the 2015 deal will result in all major economies facing legally-binding reduction commitments.
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