Episode 3: China National Carbon Market Deep-Dive with Zheng Zhang, Director for Climate Finance at the Environmental Defense Fund

In this episode of ICAP’s Carbon Market Conversations, host Trevor Laroche-Theune takes us on a deep dive into the UK ETS with Hannah Lewis, Head of UK ETS Policy and International Engagement with the UK Department for Energy Security and Net Zero and Sam Reed, Head of UK ETS Scope Expansion with the UK Department for Business, Energy and Industrial Strategy. Today’s conversation focuses on the UK ETS’s founding objectives and how it has developed since its inception, what to expect from the upcoming scope expansions, how it is preventing carbon leakage, plans for including engineered removals, and how it aligns with the UK’s broader climate goals. A more detailed breakdown of the topics explored and where you can listen to them is listed below. 0:55 - Introduction to today’s topic and our guests, Hannah Lewis and Sam Reed of the UK ETS Authority 3:10 - Introduction the UK ETS and its founding objectives 6:40 - Early challenges and opportunities transitioning from the EU ETS 9:20 - Significant developments since its launch: reduction of the cap, reduction of free allocation for industrial sectors, and announced plans to phase out free allocation for aviation, expand the ETS scope, and include GHG removals 12:20 - Similarities and differences with the EU ETS 14:00 - Rationale for scope expansions to maritime, waste incineration, and waste-to-energy sectors, and who expansions apply to 17:15 - Expectations for the scope expansions and challenges encountered 21:30 - Steps being taken to resolve challenges and recommendations for other jurisdictions that go through similar expansions 23:45 - Expectations for further scope expansions in the future 26:00 - Carbon leakage prevention - shifts in free allocation policy and the UK CBAM 32:50 - Plans for including engineered removals and the role they will play 34:50 - Making up the price difference for engineered removals to become an effective solution 36:30 - UK ETS alignment with the UK’s broader climate goals 39:40 - Outlook under the Starmer Government 41:00 - Key challenges that the UK ETS must get right in the coming years, and what steps can be taken toward their resolution 46:25 - Closing remarks More information about ICAP and the UK ETS can be found here:https://icapcarbonaction.com/en/ets/united-kingdom Further informative UK ETS resources mentioned in the episode: https://www.gov.uk/government/publications/uk-emissions-trading-scheme-long-term-pathway/the-long-term-pathway-for-the-uk-emissions-trading-scheme https://www.gov.uk/government/consultations/developing-the-uk-emissions-trading-scheme-uk-ets

In this episode of ICAP's Carbon Market Conversations, host Trevor Laroche-Theune takes listeners on a deep-dive into the China National Emissions Trading System with Zheng Zhang, Director for Climate Finance at the Environmental Defense Fund Beijing Office. Today’s conversation focuses on what makes China’s ETS unique, how it has overcome challenges from its early stages, the expected impacts of the EU CBAM in China, the future outlook for ETS scope expansion, lessons that emerging economies can learn from China’s experience, and much more. A more detailed breakdown of the topics explored and where you can listen to them is listed below: 0:55 - Introduction to today’s topic and our guest, Zheng Zhang of the Environmental Defense Fund Beijing Office2:25 - Introduction to the China National ETS and what makes it unique3:40 - Main objectives of the ETS4:15 - China’s climate goals and how the ETS aligns6:08 - Historical development of the China National ETS9:00 - Challenges that were faced and how they were addressed11:40 - Expected impacts of EU CBAM for Chinese industry13:30 - Expected impacts of EU CBAM for China’s approach to carbon pricing 16:00 - ETS scope expansion outlook and other opportunities for system development 18:45 - Carbon market linking potential20:50 - Lessons for emerging economies that are implementing, developing, or considering an ETS24:00 - The core challenge that China’s National ETS must get right in the coming years, and what steps can be taken towards finding its solution27:25 - Closing remarks More information about ICAP and the China National ETS can be found here: https://icapcarbonaction.com/en/ets/china-national-ets 

In this episode of ICAP's Carbon Market Conversations, host Trevor Laroche-Theune discusses the EU carbon border adjustment mechanism (CBAM) with Prof. Dr. Daniel Klingenfeld of the German Emissions Trading Authority. Today’s conversation covers CBAM’s expected international implications, the current status of implementation processes since the introduction of the instrument’s transitional phase in 2023, and the challenges and opportunities that lie ahead. A more detailed breakdown of the topics explored and where you can listen to them is listed below: 1:15 - Introduction to our guest, Prof. Dr. Daniel Klingenfeld of the German Emissions Trading Authority 2:12 - CBAM explainer 4:00 - CBAM implementation timeline 4:55 - CBAM’s current and expected impacts on climate ambition and emissions levels 7:42 - Most affected countries 10:00 - Influence of CBAM on recent global carbon pricing developments (Türkiye example) 11:53 - Other CBAM proposals (United States example) 13:40 - Comparing excise duties on fossil fuels to carbon pricing through a CBAM lens 15:15 - CBAM’s effect on Germany and importers’ perspectives 17:48 - Standard factors for carbon content vs. actual emissions data 18:27 - CBAM actor line of responsibilities 20:48 - Insights from first few months of implementation 23:05 - Deadline for emissions data 24:00 - Further challenges and opportunities in CBAM’s transitional period 27:14 - The core challenge of technical implementation that we must get right and how we can work toward solutions 30:00 - Closing remarks More information about the German Emissions Trading Authority (DEHSt) and CBAM can be found below: German: https://www.dehst.de/CBAM English: https://www.dehst.de/cbam More information about ICAP can be found here: https://icapcarbonaction.com/en 

In this debut episode of ICAP's Carbon Market Conversations, host Trevor Laroche-Theune discusses with Stefano De Clara, ICAP Head of Secretariat, about the development of compliance carbon markets around the world. After taking stock of how far we have come since the first emissions trading system (ETS) was operationalized in the EU in 2005, our brief world tour takes us through the most significant compliance carbon market developments in the regions that have experienced the most activity: Europe & Central Asia, North America, Latin America & the Caribbean, and the Asia Pacific. Today's diverse discussion content ranges from the main components of the EU's Fit for 55 package, to the ongoing development of new ETSs on four different continents, all the way to what Stefano personally sees as a key challenge that is particularly important for the carbon market community to get right in the years to come. A few particularly noteworthy remarks: (3:24 - 4:15) “As of today, we have 36 emissions trading systems in force worldwide, and they immediately cover almost ten gigatonnes of CO2 equivalent. That is roughly just over 18% of global GHG emissions … Last year (2023), those systems collectively raised 74 billion US dollars in auctioning revenue. If we look back at the grand total since auctioning was introduced in emissions trading systems, that brings us to more than 300 billion US dollars collected by emissions trading systems worldwide since 2007.” (4:43 - 5:01) “...almost one third of the global population lives under an ETS in force right now, and jurisdictions making up 58% of the global GDP are using emissions trading systems as a tool to reduce their CO2 emissions.” (6:39 - 7:39) “We are also seeing that innovative system designs are emerging as more and more countries and jurisdictions are developing new systems, and especially these new developments and systems that are being designed in emerging economies are giving rise to, let’s call it a new generation of hybrid and innovative emissions trading systems that often deviate from the traditional cap-and-trade blueprint, and they take up, for example, hybrid design features that combine different carbon pricing instruments in one policy tool, or for example, they take the form of intensity-based ETS, which is becoming a popular construct, especially in emerging economies.” (26:59 - 28:23) “I think that the key challenge for emissions trading systems globally, but also for carbon pricing more broadly, and also possibly for climate policy even more broadly, will be to be able to maintain the support of society at large for these instruments, for the decarbonization efforts that are needed, and for the fight against climate change overall … it is crucial going forward to find the right recipe and find the right communication strategy and find the right concrete measures to make sure that not only us as policy wonks and policy geeks, but also society at large sees the value of what these policy tools can bring, and this is really an area where also we as the community of carbon market practitioners will have to put a bit more effort and attention going forward. It will be key to maintain public support for decarbonization efforts.” The ICAP 2024 ETS Status Report is available at the following URL: https://icapcarbonaction.com/en/publications/emissions-trading-worldwide-2024-icap-status-report