Simone Ruiz's presentation at the Climate Action Conference in Brussels, 25-27 October 2010

1. Climate Action Conference
Carbon markets
27 October 2010
Simone Ruiz

2. 2009 Global Carbon Market Volumes
2008 2009
MtCO2e US$m MtCO2e US$m
EUETS 3’093 100’526 6’326 118’474
Others 162 692 880 2’346
AAUs 23 276 155 2’008
Prim CDM 404 6’511 211 2’678
JI 25 367 26 354
Vol Mkt 57 419 46 338
Secondary 1’072 26’277 1055 17’543
TOTAL 4’836 135’066 8’700 143’735
Source World Bank

3. EU-ETS : eight checks for
success or failure
1. Have we avoided (another) embarrassingly obvious collapse?
2. Does the system actually physically work?
3. Does it have strong continuing political support?
4. Is it causing economic damage?
5. Is it actually reducing emissions?
6. Is it producing an effective price signal?
7. Specifically, is its price signal affecting investment patterns?
8. Is it helping the world out of a global problem?

4. Fixing difficulties
Overallocation
Carbon leakage
Fraud
…
EU-wide allocation
Full auctioning power sector
Free allocation (benchmarks)
Compensation indirect costs
Single platform for auctioning
Enhanced security in registries

5. Continued political support
• RECALLS the crucial importance of carbon
markets, including cap-and-trade systems, for
achieving global mitigation objectives in a cost-
efficient manner and for driving low-carbon
investments while contributing to sustainable
development; Council conclusions, March 2010
EU Commission, 2005

6. 6
Fifth IETA Survey of GHG Market Sentiment - International Emissions Trading Association
Preferred instrument for business:
Confidence in the market as the most effective driver of low carbon investment
remains, but it will not work on its own

7. Lessons learned
• Emissions trading does what it says on the packet
• Price will go down when it should
• Set up the parameters right and a substantial market will appear
• Scarcity needed – banking helps
• Strong central allocation control needed
• Not a substitute for investment targets
• Competitiveness a potent political issue even without evidence
• Coherence with other policies not easy to achieve

8. Thank you
ruiz@ieta.org
www.ieta.org