On December 4, 2013, the Global Economy and Development program at Brookings hosted a private, high-level roundtable discussion led by Climate Advisers, which also featured participation from the World Bank Group, the International Emissions Trading Association (IETA) and Sindicatum Sustainable Resources, among others.
The presentations and discussion focused on the design of global carbon markets and ways to channel investment to low-carbon opportunities. While negotiations on a top-down global climate agreement have slowly continued, implementation of market-based approaches has grown as countries take action individually. From 2013 onward, 36 countries, 11 subnational jurisdictions in the United States and Canada, and seven cities and provinces in China are participating or preparing to participate in Emissions Trading Schemes, and other countries are considering market options.
Participants discussed building on this momentum by exploring policy options and reforms needed to connect these heterogeneous carbon markets and ensure low-income countries benefit from climate action, with a particular focus on the prospect of a global carbon market reserve. Representatives of IETA shared observations from the November 2013 global climate change summit in Warsaw, noting that negotiators are increasingly favoring bottom-up, nationally-determined targets. Participants from the World Bank Group furthered this discussion by describing the bank’s proposal for “globally-networked carbon markets” that hinge on creating mechanisms such as an independent rating system, an international carbon reserve and an international settlement platform for the next generation of carbon markets.
Specific proposals for the design of a potential global carbon market reserve were offered by experts from Climate Advisers, Vivid Economics and IDEAcarbon. The scope and time frame for such a reserve differed across presentations, but participants agreed that a reserve could be designed in a way that bolsters sustainable development in developing countries. Climate Advisers also highlighted the potential for self-capitalization over time by establishing and filling a reserve with today’s low-cost securities.
The published conference papers, agenda and list of participants can be found below.