IETA | International Emissions Trading Association

The joint response by the International Emissions Trading Association (IETA) and the Project Developer's Forum (PD-Forum) in response to the call for input issued by the UNFCCC requesting Parties and stakeholders to outline their views on the revision of the JI guidelines, taking into account, as appropriate, their experience of implementing the mechanisms under the Kyoto Protocol, including national guidelines, and the recommendations on options for building on the approach embodied in joint implementation, as presented in document FCCC/KP/CMP/2011/9.

IETA submitted comments to the California Air Resources Board (ARB) on April 13, 2012, responding to the release of draft regulatory amendments in anticipation of linking with Western Climate Initiative (WCI) Partners, in particular Quebec.

The submission can be read below, or downloaded in pdf format by clicking here.

Clerk of the Board California Air Resources Board 1001 I Street Sacramento, California 95814

IETA COMMENTS ON DRAFT AMENDMENTS TO THE REGULATIONS FOR LINKING WITH QUEBEC CAP-AND-TRADE PROGRAM

On behalf of the International Emissions Trading Association (IETA), I am grateful for the opportunity to provide comments, in response to California Air Resource Board’s release of “Amendments to the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms to Allow for the Use of Compliance Instruments Issued by Linked Jurisdictions”. I hope that ARB considers IETA’s perspectives and insights as it moves forward with the linking process.

I. Background

The price of an EU ETS allowance (EUA) is not bound by any price floor or ceiling but is based on price discovery regarding supply and demand in markets. The price fluctuates in line with market participants’ view of supply and demand. There is no tool foreseen for short-­term market intervention by the regulator under Directive 2003/87/EC (ETS Directive). The only form of addressing a divergence from underlying economic factors is by adjusting market supply, i.e. the emission reduction objective or the ‘cap’.

IETA submitted comments to RGGI on April 3, 2012 regarding the use of different macroeconomic models to discover the effects of a range of policy scenarios on allowance prices and program costs. Additionally, IETA provided input on potential improvements to the allowance auction process in RGGI. The submission can be viewed below, or downloaded in PDF format here.

Ms. Nicole Singh

Regional Greenhouse Gas Initiative Inc.

90 Church St. 4^th Floor

New York, NY 10007

IETA COMMENTS ON MACROECONOMIC MODELING AND PROGRAM OPERATIONS IN THE RGGI CAP-AND-TRADE PROGRAM

On behalf of the International Emissions Trading Association (IETA), I am grateful for this opportunity to provide comments on the stakeholder input regarding macroeconomic modeling and program operations, as part of the Regional Greenhouse Gas Initiative (RGGI) 2012 program review. A well-designed cap-and-trade has the potential to drive significant emissions reductions at the lowest cost to the economy.  IETA welcomes this opportunity to provide our insight into how to best improve the program during this period.

IETA submitted comments to the UNFCCC regarding the modalities and procedures of Carbon Dioxide capture and storage (CCS) within the Clean Development Mechanism (CDM). The submission focused on addressing trans-boundary issues, to allow CDM projects which cross between boundaries to be eligible and encouraged, including the harmonization of rules and practices for implementation of CCS projects. The submission also cautioned against the excessive use of global reserves, above reserve accounts already in place, as detrimental to the long-term development of viable CCS projects worldwide.

Download the full submission

IETA has provided a detailed submission to the UNFCCC Ad-Hoc Working Group on Long-Term Cooperative Action (AWG-LCA), regarding the financing of Reduced Emissions from Deforestation and Degradation (REDD+). This call for input was detailed in the aggreed AWG-LCA text at Durban, para. 69, which reads:

'Invites Parties and accredited observers to submit to the secretariat, by 5 March 2012, their views on modalities and procedures for financing results-based actions and considering activities related to decision 1/CP.16, paragraphs 68 - 70 and 72.'

IETA's submission focuses upon the following main considerations:

1. Demand for REDD+ Credits – It is critical to provide adequate incentives to reward reduction activities through ambitious goals for reduced emissions, in conjunction with or supplemental to other emissions targets. To maximize private sector finance via carbon markets long-term and robust demand is essential. A prompt start approach to REDD+ market mechanisms would catalyse immediate private sector investment. 
2. Crediting using a Nested Approach – Crediting emissions reductions activities should include the requirement to maintain environmental integrity of a national accounting framework to prevent leakage with the ability to reward performing projects for their REDD+ efforts.
3. Administration and Oversight of a REDD+ Mechanism – UNFCCC should ensure that a REDD+ based mechanism has the institutional tools and framework to provide an efficient system for crediting REDD+ activities.
4. Environmental and Social Safeguards – A mechanism must provide a level of assurance to investors in emission reductions that implementation fulfils high social and environmental standards.

Download the full submission

In the detailed submission below, IETA puts forward its arguments on how existing market approaches and a new market mechanism are necessary to achieve GHG reductions, based on IETA’s experience with existing mechanisms and its examination of possible new market mechanisms.

In summary:

1. A global, scaled-up involvement of the private sector primarily through market mechanisms is essential to achieve long term global emission reduction goals
2. Market mechanisms should be a core part of a global agreement, assisting both developed and developing countries in achieving their targets and commitments at the lowest overall cost
3. The pace of development of new market mechanisms will depend on there being clear and sustained demand for additional categories of emission reductions which requires a global commitment to reduce emissions and a global acceptance of market mechanism as a way to ensure cost-effective emission reductions and mobilize private financing
4. New market mechanisms should be based on top down rules as well as bottom up implementation of carbon markets, to encourage the creation of a global carbon market, enable linkages between regional carbon markets, and thereby reduce transaction costs
5. Both mechanism design and capacity building will be improved by the direct involvement of private sector
6. Urgent progress is needed on the international agenda on mechanisms, to avoid risks of fragmentation of international trade in carbon reduction units and loss of legitimacy for certain types of units.

Download the full submission