LRQA’s King believes ‘policy certainty’ is needed to drive carbon market growth as IETA announce annual survey findings

Carbon Expo, the annual global leading interface between climate finance and carbon markets, industry and technology opened today in Barcelona.

Against a backdrop of continued uncertainty within the climate change arena, the first day of Carbon Expo began with a call for ‘optimism’.  During the opening ceremony, Christiana Figueres, Executive Secretary of the UNFCCC said that "carbon markets are generously sprouting everywhere and will continue to grow.” 

Later during the event itself, Dirk Forrister – President  & CEO of the International Emissions Trading Association (IETA) spoke about IETA’s Annual Market Sentiment Survey.  With nine out of ten members of leading carbon associations calling the short-term intervention into the EU Emissions Trading Scheme (EU ETS) as ‘essential’, it is clear that there are many challenges ahead and issues to be resolved.

Forrister spoke candidly about the results of the survey and the fact that IETA members would overwhelmingly support intervention by the European Commission in the EU ETS within the next 12 months to improve the functioning of the market from its record current lows.  Almost all (96%) respondents back structural reform of the EU ETS, with almost half (45%) thinking that an ambitious target and cap would be the most effective option.

The outlook for price recovery remains weak, with expectations that EUAs (EU Allowances) will trade below €10 and CERs (Certified Emission Reductions) below €5 to 2020.

However, echoing Figueres’ remarks, Forrister said “Carbon markets are the preferred policy tool for addressing greenhouse gas (GHG) emissions around the world.  As new systems emerge, market sectors and policy makers need to work together to design these systems in a harmonized way – and make them ‘linking ready’.  That way, it will be easier to create a more globally connected system and a commonly traded carbon commodity, which will allow nations to meet emissions targets and preserve economic growth.”

Amongst other key findings:

• The new Californian carbon market, launched at the start of the year, is expected to increase its share of the global market in terms of value, with California Carbon Allowances expected to continue trading at US$10-20 over the first three years of the programme.
•  Only 62% believe that ICAO (the International Civil Aviation Organisation) will propose an approach to global aviation emissions regulation before 2018, and more than one respondent in ten believes that they never will.
• Despite the collapse of carbon prices, all regulated entities surveyed said that the carbon price is still relevant to their capital investment decisions, with four out of five saying it is an important factor.

More on IETA’s research can be found here.

Commenting on the IETA’s research, Madlen King – LRQA Global Head of Climate Change and Sustainability said “The results of the IETA market survey reflect a growing consensus that the private sector is on board IF the policy makers will play ball. Christiana Figueres said this morning that we ‘cannot wait for policy perfection’ but I believe that policy improvement and greater certainty is needed to turn things around in the short-medium term.”