New Directions in Global Carbon Markets: Towards Fair Pricing and Trade

The issue of carbon pricing has seen a resurgence in global debate since the 2022 United Nations Climate Change Conference (COP27). Whether through direct taxation or through the trade in carbon credits on compliance and voluntary market places, robust disagreements around fairness in pricing, taxation, and trade measures have accompanied the conversation.

Despite the urgent need to attain equilibrium and efficiency in global carbon prices, only a handful of countries have introduced taxes or carbon markets. Aside from the EU Emissions Trading Scheme (ETS), which has been trading for nearly 20 years, only a few governments have their own carbon trading schemes - with both China and the UK setting up their national compliance markets in 2021, and Indonesia and Japan following suit in 2023. Meanwhile, the new EU Carbon Border Adjustment Mechanism (CBAM) also aims to penalise carbon intensive exports from third countries into the EU. Voluntary Carbon Markets (VCMs) are therefore aiming to step into the breach as national schemes attempt to cohere.

But the voluntary markets are still nascent with a market cap of just $2 billion, as well as being unregulated and subject to rampant financial speculation and plagued by disputes about the veracity of rainforest credits. Yet VCMs are promising a trillion dollar global opportunity to mitigate climate change through free-market carbon pricing while also creating millions of green jobs. The biggest opportunity, and challenge, for realising this is in Africa, where the VCM being introduced by the new African Carbon Markets Initiative (ACMI) also promises prosperity and sustainable development alongside climate mitigation.

However, the discrepancies in competitiveness for these markets have seen African leaders call for a global carbon tax and fair pricing on global carbon markets in the recent Nairobi Declaration. But is there a political will for this to level the playing field and to make the necessary adjustments and investments at the multilateral level, and is it economically efficient? Join us as we unpack the issues with our expert panel.

Speakers:

• Martin Berg — CEO, Climate Asset Management
• Ben Filewod — Assistant Professorial Research Fellow in Conservation Finance, Grantham Research Institute, LSE
• Professor Sarah Gordon — Visiting Professor in Practice, Grantham Research Institute, LSE
• Vedantha Kumar — Senior Manager, Climate, The Children’s Investment Fund Foundation
• Desne Masie — Visiting Senior Fellow, LSE

Chair: Professor David Luke — Professor in Practice, LSE