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Policy Briefing – Rethinking the role of international carbon markets in the EU’s 2030 climate framework

In January 2014 the European Commission is expected to publish a White Paper on the EU’s Climate Framework for the period of 2020-2030. The Framework will include a comprehensive policy package that will define climate and energy targets and policies. The EU’s Heads of States are expected to decide on EU climate targets for 2030 in March 2014.

The EU will have to reconsider the use of international offsets for the period post 2020. The EU is planning to link to other emission trading systems, and will also need to ensure that such linking  does not undermine EU climate targets. Existing carbon markets have to a large extent not delivered the promised climate benefits. The two existing UN offsetting mechanisms, the Clean Development Mechanism (CDM) and Joint Implementation (JI), have generated over two billion offsets, but the majority of them are of dubious quality. Cap-and-trade systems have suffered from inflexible designs and political resistance to addressing oversupply and other short-comings, causing large price fluctuations and ultimately a severe price crash.

Nevertheless, many countries are developing new GHG emissions trading schemes and offsetting programmes. Under the UNFCCC’s Framework for Various Approaches (FVA) and the New Market Mechanism (NMM), countries are negotiating if and how such new carbon markets should be governed internationally. The quality and size of these new markets is unknown. Comprehensive rules that would ensure the quality integrity of new markets are unlikely.

The lessons learned from existing markets must be taken into account in the EU’s 2030 Climate Framework to ensure that the EU is doing its fair share to protect the global climate.

Carbon Market Watch recommends:

  • A legally binding EU domestic GHG reduction target of at least 55 per cent below 1990 emission levels.
  • No international offsets for meeting 2030 mitigation obligations.
  • Structural reforms of the EU ETS and the ESD to ensure they can drive emission reductions.
  • No carry-over of offsets or allowances from pre-2020 for compliance under the 2030 Climate Framework.
  • A comprehensive long-term strategy on international climate finance.
  • ETS-linking safeguards that ensure EU climate goals are not compromised.




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