The 2018 survey of carbon markets participants, produced by PwC UK’s Sustainability and Climate Change team for the International Emissions Trading Association (IETA), has found:
“Success in China could be decisive: if the ETS there succeeds, it could inspire others; if it fails it will undermine action around the world.”
Conducted by PwC, the survey of 119 IETA members from across the globe has revealed considerable progress in carbon markets over the last year, with the hope of more to come. Regional developments in Latin America, East Asia and North America have all given cause for optimism, as has the near trebling of the EU ETS price per tonne of carbon over the last year, which is still considered by many to be the carbon price benchmark.
However it is the future of China’s newly launched ETS (which is set to overtake the EU ETS as the world’s largest) that is viewed by many respondents as the decisive factor in global carbon markets.
Tempering this sense of optimism is respondents’ scepticism that developed countries will mobilise the promised $100 billion p.a. commitment in 2020 onwards. Moreover, as in previous years, there is a fairly sizeable gulf between what respondents think carbon prices should be to achieve the two degrees goal, and what they expect them to be.
Many respondents hold governments worldwide responsible for this, with one suggesting “Governments need to get real about their climate ambition, they need to get the basics right […] Discussion of 1.5°C is meaningless until they close the existing gap with 2°C”.
Appeals to genuine political commitment, more transparent dialogues and greater cooperation were other common themes.
As ever, respondents feel business has a big role to play too, with a significant majority of respondents expecting corporate voluntary offsetting to increase within the next 5-10 years. Shareholder pressure, CORSIA developments and increased uptake of the TCFD recommendations are considered to be some of the key drivers behind this change. As a result, companies are increasingly focused on the potential of carbon markets as part of their climate strategy.
The report’s authors would be very happy to discuss what this could mean for your business or organisation. If you are interested, please refer to the contacts below.