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The role of carbon markets in reaching carbon neutrality

International perspectives

In the context of the global trend of international climate cooperation, as the number of carbon markets grows, the long-term contribution of market-based instruments to reach carbon neutrality by 2050 should be further assessed. In general, the size, scope, parameters, and prices of Emissions Trading Systems (ETSs) vary and evolve depending on the social, economic, political, and legal context of each jurisdiction. All these aspects of regulated carbon markets are to be reconsidered by policymakers considering the renewed and stronger climate ambitions. To tackle challenges, regulators may find insights and guidance from other contexts. Hence, there is a strong need for assessing and comparing the international experience of ETSs.

The workshop aims to collect insights from cutting-edge research and a comparison of the European experience of the EU ETS with other international ETSs. This aims to identify trends, convergence and gaps across different regions and methodologies (i.e., ex-post and ex-ante model-based assessments) and results. This work stands as the basis for informing policymakers and fostering trust among jurisdictions on carbon markets. Its intention is also to create a peer community on carbon markets.

Applicants are warmly invited to submit studies on:

The scope expansion of emissions trading: What are the pros and cons of extending an ETS to new sectors or gases? How can ETSs be extended in practice? How does this expansion impact non- or newly covered sectors, and actors within the ETS?

Negative emissions: To what extent is the use of negative emissions credits desirable for achieving a net-zero target for regulated sectors? Should an ETS interact with voluntary carbon markets that supply negative emissions credits? Also, can the life of an ETS continue beyond full decarbonisation, for instance by including net negative emissions?

Future allowance prices: What are the drivers of price dynamics? What evolution of allowance prices can be expected in the absence of regulatory interventions? Which price scenarios justify specific regulatory interventions? Is there an optimal price ensuring acceptability and ambition while preserving carbon revenues?

Market oversight and trading: What actors engage in trading permits and what are their behaviours? Is there evidence of abnormal behaviours or market imperfections? How to prevent the risk of speculative phenomena?

Science-based environmental policymaking: How to close the loop between the policy processes and scientific work to enhance climate policies, including carbon markets? How do policymakers interpret scientific evidence? Do they react differently to different disciplines and methodologies?

 

The convenors welcome particularly economic ex-post studies but will consider positively any interdisciplinary approaches and ex-ante model-based assessment tackling issues in this call. The submission of papers assessing both European and non-European initiatives is encouraged.

Co-Convenors

Page last updated on 05/12/2023