Understanding barriers to linking heterogeneous emissions trading schemes: evidence from and lessons for Northeast Asia

Climate action in the making: business and civil society views on the world’s first carbon border levy

“…While CBAM is a highly technical instrument, its success and survival will be determined by political struggles as much as by its economic rationale and value. Political barriers might create challenges for creating an effective CBAM, as evidenced by debates in other jurisdictions with emissions trading and carbon pricing instruments (Dellatte and Rudolph 2022). Our analysis showed where the main conflicts in the CBAM debate lie.…”

A Linkage Framework for the China National Emission Trading System (CETS): Insight from Key Global Carbon Markets

“…The experts from the three jurisdictions stated that a clear legal basis for ETS participants would enhance the permanence and predictability of the linkages. Each ETS must be built upon a robust legal foundation that provides authority to link with a foreign jurisdiction, and the authority to implement appropriate linking regulations, including the role and status of emission allowances, compliance obligations, trading rules, monitoring, reporting and verification principles, and the basis for penalties for noncompliance or infringements [32,33]. A lack of compatible legal frameworks could be a barrier to authorizing necessary interlinkages, including the safeguarding of their operation, and this might prevent an executive agency from linking its ETS with a foreign jurisdiction's ETS.…”

“…On the other hand, the Chinese experts recognized that the reports were not transparent in Chinese pilot projects in the past, and argued that the CETS urgently needs to improve market information transparency. For instance, the disclosure of strategic information of covered entities such as fuel consumption, emission data and allowance ownership or trading activities is protected from informed public access [33]. The NDRC shares market information only with market actors and the regulators [33,40].…”

“…For instance, the disclosure of strategic information of covered entities such as fuel consumption, emission data and allowance ownership or trading activities is protected from informed public access [33]. The NDRC shares market information only with market actors and the regulators [33,40]. The lack of such information will lead to ineffective participation and less confidence from participating jurisdictions in linking ETS due to reliability of the partners' policy [41,42].…”

“…Moreover, the regular revision for MRV can facilitate the likelihood and readiness to linkage as the MRV systems are not globally uniform, and there is always room for improving the robustness [24]. Though the MRV measures and provisions are not required to be identical upon linkage [44], common or at least similar verification methods and report standards should be in place to build confidence and guarantee the sustainability of mitigation outcomes reported in a common or linked registry [33]. Additionally, setting up capacity of joint MRV institutions based on the international framework of linkage and MRV can address MRV issues and build confidence among the partner jurisdiction [33].…”