In the context of the LIFE DICET project, the second session of the second Carbon Market Policy Dialogue (CMPD) on "Environmental integrity: use of offsets: implications for linking" took place on 9 July 2021. The CMPD sees the participation of the regulators of six major emissions trading systems (ETSs), namely those of the EU, California, China, Québec, New Zealand and Switzerland, and a number of international stakeholders, including policymakers, researchers as well as representatives of industry and civil society. In view of the meeting, a background report (Galdi et al., 2022) was produced. This policy brief offers an abridged version of the report and, in addition, it provides a selection of insights from the policy dialogue. Most emissions trading systems around the world are experiencing a positive momentum: allowance prices are on the rise and carbon markets are attracting participation from financial operators. While high allowance prices are generally the sign of a stringent and, therefore, working ETS, very high prices pose at least two types of problems: one is the risk of crumbling political support for the ETS; the other concerns the possibility that, outside the ETS (whether in the same jurisdiction or not), much cheaper emissions abatement options are unexploited. In theory, the use of emission offsets, i.e. the use of emission credits for offsetting emissions, offers a solution to the second issue, as it allows for emissions abatement within the ETS to be replaced by cheaper abatement outside. In this sense, the use of offsets offers efficiency gains that are similar to those achievable by linking ETSs with different abatement costs. Moreover, as cheaper abatement opportunities tend to be concentrated in less developed economies, emission offsets provide a platform for international cooperation that involves those. In practice, however, the experience with emission offsetting has so far been mixed or even controversial.

At the time of writing (June 2021), most emissions trading systems (ETSs) around the world are experiencing a positive momentum: allowance prices are on the rise and carbon markets are attracting participation from financial operators. While high allowance prices are generally the sign of a stringent and, therefore, working ETS, very high prices pose at least two types of problems: one is the risk of crumbling political support for the ETS; the other concerns the possibility that, outside the ETS (whether in the same jurisdiction or not), much cheaper emissions abatement options are unexploited. In theory, the use of emission offsets, i.e. the use of emission credits for offsetting emissions, offers a solution to the second issue, as it allows for emissions abatement within the ETS to be replaced by cheaper abatement outside. In this sense, the use of offsets offers efficiency gains that are similar to those achievable by linking ETSs with different abatement costs. Moreover, as cheaper abatement opportunities tend to be concentrated in less developed economies, emission offsets provide a platform for international cooperation that involves those. In practice, however, the experience with emission offsetting has so far been mixed or even controversial.

Asia and the Pacific has achieved rapid economic expansion in the recent years and has become a major source of greenhouse gas (GHG) emissions. With more than half of the world’s population and high rates of economic growth, the region is especially vulnerable to the effects of climate change and therefore must play its part in cutting GHG emissions. The Paris Agreement adopted last December 2015 at the United Nations Framework Convention on Climate Change COP21 aims to restrict global warming to well below 2°C above preindustrial levels and to pursue efforts to reach 1.5°C---which is especially relevant to Asia and the Pacific region given its vulnerability. This knowledge product highlights how robust policies on emissions trading systems (ETS) can be important tools in reducing GHG emissions in a cost-effective manner, as well as supporting the mobilization of finance together with deployment of innovative technologies. There are currently 17 ETSs in place in four continents and account for nearly 40% of global gross domestic product. In Asia and the Pacific region, there are 11 systems operating, with more being planned. The growing wealth of experience on ETSs can be valuable to support DMCs that are planning and designing new systems of their own. This knowledge product summarizes some of the most significant learning experiences to date and discusses some of the solutions to alleviate challenges that have been faced. It also examines the possibilities for future linked carbon markets in the region.

A growing number of GHG emissions trading schemes are being implemented at regional or national levels. However, even as the number of different schemes grows, few linkages exist between them. Major cap-and-trade proposals are currently at important stages in their development, especially in the United States, Japan and Australia, some of which explicitly emphasize the aim of linking with other schemes. One of the strategic goals of European climate policy is linking the EU ETS with other comparable schemes. The research presented in this volume is on actual economic, political and institutional constraints and implications. It examines the role of linking trading schemes for the development of the post-Kyoto climate architecture and for increasing linkage between schemes. This essential research will be relevant to both the scientific community and for policymakers who are involved in the design of emerging trading schemes and offset mechanisms, as well as in designing the post Kyoto climate regime.This volume focuses specifically on: o Economic, institutional/regulatory and legal dimensions of linkingo Implications of linking on the design of emerging trading schemeso The role of linking trading schemes for the development of the post-Kyoto climate regim

Emissions trading is becoming an increasingly popular policy instrument with growing diversity in design. This book examines emissions trading design, emissions trading implementation problems and how to address them. In an easily accessible way

Anthropogenic Climate Change is one of the biggest challenges of the 21st century and receives more and more international awareness. The central instruments to counter climate change are emissions trading schemes (ETS) to cover GHG emissions. To increase efficiency and to ensure global reduction of emissions damaging to the climate, an international emissions trading scheme would be a rational choice. To establish such a global scheme, political decision makers could follow a bottom-up-approach by linking already existing ETS with each other. The book investigates such linkings of emissions trading schemes, which provide many benefits for the linking partners. As experience shows, although the number of schemes increased in the last decade, only a few linkings were established. Thus, the book answers the question, if and which conditions for states exist to link their emissions trading schemes. .