{"id":18684,"date":"2018-08-01T12:13:04","date_gmt":"2018-08-01T17:13:04","guid":{"rendered":"http:\/\/blogs.edf.org\/climate411\/?p=18684"},"modified":"2024-04-09T10:51:05","modified_gmt":"2024-04-09T15:51:05","slug":"international-trading-of-emissions-reductions-could-greatly-increase-global-climate-ambition","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/climate411\/2018\/08\/01\/international-trading-of-emissions-reductions-could-greatly-increase-global-climate-ambition\/","title":{"rendered":"International trading of emissions reductions could greatly increase global climate ambition"},"content":{"rendered":"
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The Arc de Triomphe following the signing of the Paris Agreement. Each party set a Nationally Determined Contribution for emissions reductions.<\/figcaption><\/figure>\n

This post was authored by Gabriela Leslie, Pedro Piris-Cabezas<\/a> and Ruben Lubowski<\/a><\/em><\/p>\n

For more information, read our factsheet, The Power of Markets to Increase Ambition.<\/a><\/p>\n

Update:<\/strong> the analysis in this blog has been published in the journal World Development<\/em><\/a> (open source).<\/p>\n

Carbon pricing is steadily growing worldwide<\/a> and increasingly recognized as a way to achieve emissions reductions at lower cost than with standard regulations. A recent economic analysis<\/a> from Environmental Defense Fund found that these cost savings from international trading of emissions could translate into direct gains for the atmosphere \u2013 and could produce nearly double the climate ambition at the same overall cost as countries\u2019 complying with their Paris Agreement targets without international markets.<\/p>\n

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The cost savings from international emissions trading could produce nearly double the climate ambition at the same overall cost as complying with Paris Agreement targets without international markets.<\/p>\n<\/div>\n

Global emissions trading reduces the cost of meeting NDCs<\/strong>
\nFor this analysis, we first took a look at the overall level of emissions reductions the world would achieve if every nation successfully met the goals established in their nationally determined contributions (NDCs) under the Paris Agreement relative to business as usual. We then considered different scenarios with and without the ability to reallocate where reductions occur across countries and sectors through international trading.<\/p>\n

The results indicated that global emissions trading could reduce the total mitigation cost of meeting current Paris pledges by 59 percent to 79 percent. This translates to about $300 to $400 billion in current value terms over 2020-2035, with the high end of the range assuming that Reductions in Emissions from Deforestation and Forest Degradation (REDD+), over and beyond what is needed to meet NDCs, are included in markets.<\/p>\n

What\u2019s more, if these cost savings were re-invested into greater emissions reductions, the model estimates that cumulative emissions reductions over the period 2020-2035 would nearly double the emissions reductions that would be achieved using only current policies<\/strong> \u2013 from 77 GTCO2e in the non-trading base case to 147 GTCO2e in a scenario with full global emissions trading, a 91% increase. (See Figure 1)<\/p>\n

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Figure 1: Emissions reductions under various scenarios for market coverage, holding total cost constant.<\/strong> Estimated emissions reductions achievable under the base case (current policies) and four scenarios for increased international market coverage, holding total cost constant.<\/figcaption><\/figure>\n

Ambition increases even with limited global markets<\/strong>
\nNext, we considered a number of trading scenarios where different groups of nations could trade emissions reductions across borders to maximize their economic benefits over time.<\/p>\n

We found even partial coverage of carbon markets could lead to more ambitious climate targets, at no added cost. For example, as shown in Figure 1, four different scenarios were assessed relative to a \u201ccurrent policy\u201d baseline. Each scenario first assumes that carbon markets at least partially covered the United States, EU, China,<\/strong> and emissions from international aviation<\/strong>. Then, different scenarios were expanded to include:<\/p>\n