According to their Geneva-based lobby group emissions traders want United Nations climate talks in November to set rules for a trial system of globally linked carbon markets.
A market framework recognised by the UN would allow member countries to pursue their own carbon-cutting programs, while providing a “large” pool of tradable emission-reduction credits, Dirk Forrister, president of the International Emissions Trading Association (IETA), said by phone.
“The incentive to participate is that it’s wise to be part of a broad group of countries,” said Mr Forrister, who helped advise former United States President Bill Clinton on climate protection.
Negotiators at UN talks on a global climate treaty in 2015 due to come into force from 2020 are meeting in Warsaw on November 11 to lay the groundwork for those discussions.
Market-based measures to protect the climate are still attractive for nations because they offer the cheapest option, Mr Forrister said, even after a surplus of UN carbon-credits drove prices down 97 per cent since 2008.
The UN sought input from nations, industry and environmental groups on how to coordinate countries’ diverse climate-protection strategies.
The framework’s “market oversights body,” elected by countries in the system, would create and oversee a new type of carbon permit, similar to the tradable Assigned Amount Units handed to developed countries under the 1997 Kyoto Protocol, according to IETA.
The groupings members include Bank of America and Royal Dutch Shell.
The United Kingdom, which has a minority Conservative government, already uses carbon budgets backed by law.
The US, which failed to join Kyoto, will be attracted to such the new framework because the nation’s fast expansion of shale gas use has shown how quickly price incentives can reduce emissions, Mr Forrister said.
Using gas, which emits about half the carbon dioxide of coal when burned for power, may allow the US to become a seller of credits instead of a buyer, he said.
“We want to move into a period of testing,” Mr Forrister said.
“If countries wanted to experiment next year, the Warsaw outcome should encourage them to do so.”