The Evolution of Carbon Pricing Policies and Market Mechanisms

As we head towards COP26, many await the last piece of the Paris Rulebook related to Article 6 and potential international carbon trading to be finalized. Whether it is or not, there are some early movers who plan to pursue completion of trades, using the partially completed Rulebook already agreed in addition to a well-documented history laid down during the Kyoto Protocol. Is this all that is needed to keep us to a 1.5 degrees pathway via trade? At GGGI we feel that international carbon trading is just one part of the puzzle that allows countries to value, by putting a price on, an asset which they can then use to their benefit if they choose a pathway of sustainable green growth.

Our presenters and panel took us through a series of analyses of carbon pricing, from directly taxing carbon in Indonesia with an analysis of the strengths and weaknesses of this approach, to the lessons we can learn from the Clean Development Mechanism under the Kyoto Protocol. We then took a look at how domestic trading schemes can be improved – specifically on auctioning of allowances in China. Finally, as part of our panel discussion we heard how Australia tackled all of these ideas and where they stand now – at the dawn of potential Paris era trading.