Contact: Katie Kouchakji, email@example.com
COLOGNE, 25 May – An overwhelming majority of respondents to IETA’s annual market sentiment survey expect an expansion of carbon markets, driven by the Paris Agreement.
Over 80% of respondents to this year’s survey, conducted by PwC, said they expect existing carbon markets to expand as a result of the Paris Agreement – compared with 58% last year. This will be driven by developments at both the national and sub-national level, the survey found.
By 2025, new emissions trading systems (ETSs) are seen starting up in Canada, Australia, Brazil, Chile, Japan, Mexico, South Africa and Turkey, said respondents. This is in addition to the national ETS in China that is expected to begin next year, as well as the Ontario market, the legislation for which was passed last week.
“This is the first real test of market sentiment since the Paris Agreement – and the mood is clearly positive,” says IETA President and CEO Dirk Forrister. “The inclusion of markets in the agreement has boosted morale and opens the door for further opportunities for business to engage in carbon markets around the world.”
He adds: “We are particularly interested in the prospects for new markets taking seed in the coming years – especially as more than 90 governments stated that market access is essential to fulfilling their Paris pledges, according to analysis by IETA and Environmental Defense Fund1.”
The carbon price respondents feel is needed to achieve the Paris Agreement’s objective to limit warming to well below 2°C jumped by a third this year, to €40. This is in stark contrast to their expectations for prices in major carbon markets from now until 2020, ranging from €6 to €15.
“The gap between price expectations for major markets and the price required to achieve the Paris goals reflects the difference between ambition and reality,” says Forrister. “This needs to be addressed urgently if the world’s political aims are to be met.”
“This survey sends a clear message that governments need to get serious about carbon pricing or they won’t hit the Paris targets,” says Jonathan Grant, Director, PwC, who performed analysis on the survey. “IETA members have highlighted the yawning gap between current prices and what’s needed to achieve the Paris objectives.”
He adds: “With such low carbon prices, some will question whether the policy is working and changing business decisions or if it has become just an administrative burden on companies.”
The survey report will be released at a press conference at Carbon Expo in Cologne on 25 May at 9.15am CET. Hard copies will be available at the press conference and it can also be downloaded from the IETA website.
NOTES1 See Carbon Pricing: The Paris Agreement's Key Ingredient, released in April 2016