1、ICAP Status Report 2023 STATUS REPORT 2023EMISSIONS TRADING WORLDWIDEInternational Carbon Action Partnership1ICAP Status Report 2023Emissions EMISSIONS TRADING WORLDWIDEINTERNATIONAL CARBON ACTION PARTNERSHIP STATUS REPORT 2023CITE AS:ICAP(2023).Emissions Trading Worldwide:Status Report 2023.Berlin:

2、International Carbon Action Partnership.EDITORIAL TEAM:Zhibin Chen,Stefano De Clara,Baran Doda,Alexander Eden,Maia Hall,Leon Heckmann,Iryna Holovko,David Hynes,Martina Kehrer,Stephanie La Hoz Theuer,Trevor Laroche-Theune,Andrs Olarte Pea,Victor Ortiz Rivera,Santiago Ramrez Niembro,Anastasia Steinlei

3、n,Theresa Wildgrube.The ICAP Secretariat expresses its gratitude to policymakers from the ICAP membership and further collaborators from the emissions trading field,who provided insightful written contributions and/or carefully reviewed the report:Robin Damberger(Austria),Petra Krems-Ladenberger(Aus

4、tria),Henrik Neier(Austria),Fabian Stckl(Austria),Luiz Mauricio de Araujo Navarro(Brazil),Raquel Breda dos Santos(Brazil),Gustavo Saboia Fontenele e Silva(Brazil),Rachel Gold(California),Bob Languell(California),Shelby Livingston(California),Amy Ng(California),Rajinder Sahota(California),Mark Sippol

5、a(California),Camille Sultana(California),Jeff Lindberg(Canada),Simon Tudiver(Canada),Marijke Vermaak(Canada),Maria Jose Garca Cabello(Chile),Juan Pedro Searle(Chile),Isabella Villanueva(Chile),Yi Zou(China Beijing Environment Exchange),Qiang Li(Chongqing International Investment Consultation Group)

6、,Marco Antonio Murcia Baquero(Colombia),Polona Gregorin(European Commission),Damien Meadows(European Commission),Mette Quinn(European Commission),Joao Serrano Gomes(European Commission),Beatriz Yordi(European Commission),Julia Ziemann(European Commission),Jos Delbeke(European University Institute),M

7、ichael Themann(Germany),Dirk Weinreich(Germany),Saurabh Diddi(India),Dida Gardera(Indonesia),Ministry of the Environment of Japan,Botagoz Akhmetova(Kazakhstan),Muhamad Ridzwan Bin Ali(Malaysia),Ahmad Farid Bin Mohammed(Malaysia),Mohd Hafdzuan Adzmi(Malaysia),Zainorfarah Zainuddin(Malaysia),William S

8、pace(Massachusetts),Diana Karin Guzmn Torres(Mexico),Suriel Islas Martnez(Mexico),Jelena Ban(Montenegro),Ranko Lazovic(Montenegro),Jonathan Binder(New York State),Lois New(New York State),Sarah Deblock(New Zealand),Freeya Farrar(New Zealand),Scott Gulliver(New Zealand),Kyla van Heerden(New Zealand),

9、Ted Jamieson(New Zealand),Jacqueline Ruesga(New Zealand),Robert Ondhowe(Nigeria),Katherine Quinlan(North Carolina),Randy Strait(North Carolina),Jonas Goldman(Nova Scotia),Nancy Rondeaux 2ICAP Status Report 2023Emissions(Nova Scotia),Andrew Webber(Nova Scotia),Whitney Dorer(Oregon),Rachel Fernandez(O

10、regon),Nicole Singh(Oregon),Hadika Syeda Jamshaid(Pakistan),Jennie Demjanick (Pennsylvania),Louie Krak(Pennsylvania),Ottmar Edenhofer(Potsdam Institute for Climate Impact Research),Michael Pahle(Potsdam Institute for Climate Impact Research),Jonathan Beaulieu(Qubec),Claude Ct(Qubec),Julie Ct(Qubec),

11、Steve Doucet-Hon(Qubec),Nicolas Garceau(Qubec),Olivier Lacroix(Qubec),Kim Ricard(Qubec),Mourad Ziani(Qubec),Ministry of the Environment of the Republic of Korea,Jin Li(Shanghai Environment and Energy Exchange),Lishen Li(SinoCarbon),Siyue Liu(SinoCarbon),Simon Fellermeyer(Switzerland),Thomas Kellerha

12、ls(Switzerland),Rongphet Bunchuaidee(Thailand),Pathom Chaiyapruksaton(Thailand),Phakamon Suparppunt(Thailand),Noriko Adachi(Tokyo Metropolitan Government),Aoki Tomotaka(Tokyo Metropolitan Government),Abdulkadir Bekta(Trkiye),Kaan Moral(Trkiye),Okan Uurlu(Trkiye),yk Uyank(Trkiye),Pavlo Masiukov(Ukrai

13、ne),Olga Yukhymchuk(Ukraine),Rufina Acheampong(United Kingdom),Ishtar Ali(United Kingdom),Joe Cooper(United Kingdom),Matthew Davies(United Kingdom),Seamus Gallagher(United Kingdom),Joe Glynn(United Kingdom),Charlie Lewis(United Kingdom),Hannah Lewis(United Kingdom),Jacob Rose(United Kingdom),Greg Sm

14、ith(United Kingdom),Brian Woods(Vermont),Tang The Cuong(Vietnam),Luong Quang Huy(Vietnam),Mai Kim Lien(Vietnam),Bill Drumheller(Washington),Luke Martland(Washington).The ICAP Secretariat is grateful to the Federal Ministry for Economic Affairs and Climate Action,Germany,for funding this report.adelp

15、hi consult GmbH lends scien-tific and technical support to the ICAP Secretariat and coordinated the compilation and production of the report.We wish to thank Katie Kouchakji(KKE Communications)for her careful editing and proofreading of the report,as well as for her communication advice.A special th

16、anks to Carolin Faulenbach and Janibel Munoz Torres for editorial assistance.3ICAP Status Report 2023ContentsCONTENTSPRACTITIONER INSIGHTS01INFOGRAPHICS02FACTSHEETS03ABOUT ICAP04FOREWORD 5EXECUTIVE SUMMARY 7NOTES ON METHODS AND SOURCES 210LIST OF ACRONYMS 2154ICAP Status Report 2023ForewordThis repo

17、rt marks a double anniversary for the International Carbon Action Partnership.Founded in 2007 in Lisbon,ICAP celebrated its 15th birthday at the end of last year.At the time,19 government represen-tatives gathered in Portugal to create a space for governments and public authorities to discuss market

18、-based solutions as a response to global climate change.“Strong,immediate,and sustained action is essential to avert severe environmental,health,economic,and security impacts”:ICAPs founding members chose these words 15 years ago to alert us to the urgency of action.And action there was.Over the pas

19、t decade and a half,ICAP has increased its membership base to 40 member and observer jurisdictions from across the globe.It has become the central discussion forum and knowledge hub for emissions trading for both specialized and broader audiences.It has delivered courses to over 700 participants fro

20、m more than 60 countries,building capacity on emissions trading as a key policy instrument to tackle climate change globally.This year,we also celebrate the 10th edition of our annual Status Report on emissions trading worldwide.In ten years,the world of emissions trading has changed drastically.Sys

21、tems have undergone important structural reforms to ensure they can deliver on increasingly ambitious climate targets.Jurisdictions have legislated tighter caps and founded new cooperation initiatives.Looking back to 2014,the first edition of our report counted only 13 ETSs in force and 15 under con

22、sideration.Today,we have reached 28 systems around the world in force,and 21 at different stages of development and consideration,cast across different supra-,national,and subnational geographies and economies.FOREWORDADVANCING EMISSIONS TRADING SYSTEMS:CHALLENGES AND OPPORTUNITIES ON THE PATH TO DE

23、EP DECARBONIZATION5In ten years,the world of emissions trading has changed drastically.Systems have undergone important structural reforms to ensure they can deliver on increasingly ambitious climate targets.Some of these markets have now been operating for nearly two decades and have overcome major

24、 crises.The worlds oldest carbon market,the European Union ETS,survived the 2008 global financial crisis and its economic aftermath.Reforms since then have made it more resilient,and other systems around the world,from California to New Zealand,have implemented similar bolstering measures.These refo

25、rms were put to the test during the COVID-19 pandemic at the turn of this decade,but the markets responded as hoped and have weathered this well.The past year has marked our entry into another storm with a yet uncertain outcome:the global energy crisis.This crisis is characterized by record high ene

26、rgy prices,fuel shortages,and rising poverty.These effects are not the result of ambitious climate policies such as carbon pricing,as some are quick to claim,but stem from our excessive dependence on fossil fuels.We made great strides to curb our use of fossil fuels in 2022,with the uptake of heat p

27、umps,installation of renewables,and purchases of electric vehicles on the rise around the world.But we need to keep striving to do more,to keep developing reliable and affordable zero-carbon options while protecting vulnerable populations.An ETS is a powerful instrument that can help bring about the

28、se necessary changes.As the signed articles in this report show,the price signal of an ETS provides an important incentive to invest in a green economy and encourages compliance with emission reduction targets.Revenue recycling can subsidize emerging technologies,help accelerate the decarbonization

29、of our industrial,energy,and transportation sectors and support vulnerable communities.Indeed,these are all measures that help protect society from high energy prices.Emissions trading has a critical role to play,not only in our exit from the current energy crisis but also to help governments achiev

30、e their net-zero targets by mid-century.It supports reduction trajectories and sets milestones on the road to carbon neutrality.In 15 years,ICAP has become an essential forum for governments and public authorities to share knowledge and experiences of ETS.As we enter the most decisive years of clima

31、te action,we at ICAP promise to continue to pave the way towards a decarbonized world.RAJINDER SAHOTACo-chair of the International Carbon Action Partnership and Deputy Executive Officer Climate Change and Research California Air Resources BoardDIRK WEINREICHCo-chair of the International Carbon Actio

32、n Partnership and Head of Division Climate Legislation,Emissions TradingFederal Ministry for Economic Affairs and Climate Action,Germany1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents6ICAP Status Report 2023ForewordICAP Status Report 2023Executive SummaryEXECUTIVE SUMM

33、ARYThis years edition marks the 10th anniversary of the International Carbon Action Partnership(ICAP)Status Report and provides a good opportunity to look back at developments in emissions trading systems(ETSs)over the last decade.Since the first Status Report,the number of ETSs in operation has mor

34、e than doubled,growing from 13 to the current 28,and so too did the share of global emissions covered by an ETS,which jumped from 8%to 17%,following the increase from below 4 gigatons in 2014 to the current 9 gigatons.Beyond the bare numbers,it is remarkable to look back and see what themes and deve

35、lopments characterized the first ICAP ETS Status Report in 2014.The reports foreword opened by sorely noting that“despite years of international negotiations,a comprehensive global accord to halt climate change remains elusive”.In the reports first signed article,EU policymakers reflected on the ong

36、oing debate around backloading in the EU ETS,a measure aimed at mitigating overallocation in the system due to the global economic downturn that followed the 2008 financial crisis.Other articles focused on the lessons learned from the first few months of operation of the Shenzhen carbon market,China

37、s first pilot ETS,and on the experiences with the investment of auction proceeds in the Regional Green-house Gas Initiative(RGGI),which was the only ETS with extensive experience,given that auctioning in other systems was just beginning.The report was eagerly awaiting the operationalization of the E

38、TS linkage between California and Quebec,with the first joint auction scheduled for later that year,and the launch of the Korean ETS in 2015.Fast forward ten years and the Paris Agreement is in full force and a key driver for global climate action.The EU ETS,along with the other existing ETSs,has fu

39、lly recovered from the effects of the 2008 financial crisis,weathered a global pandemic,and is proving resilient to an unprecedented global energy crisis.Building on the experience gained with the ETS pilots,China has launched a nation-wide ETS,which is now the worlds largest such system.The use of

40、auction revenues has become a key aspect in most mature systems,and it is especially useful in maintaining public support for carbon pricing,mitigating the effects of the energy crisis,and achieving additional co-benefits.The linkage between California and Quebec is now a prime example of successful

41、 cross-border linking and the Korean ETS,now in its third phase of operation,is a reference for other jurisdictions in Asia.And these are just some examples.The last decade has not been smooth sailing.As the global economy slowly lifted itself out of the pandemic,war in Europe has triggered yet anot

42、her series of tempests that have affected many countries across the world.The starkest of these is the ongoing energy crisis.It has not only laid bare severe energy dependencies but has once again served as a stress test for climate policies like emissions trading.As governments and companies addres

43、s these challenges both in the immediate and mid-to longer term,it is important to keep sight of ambitious climate targets and commitments to net zero by 7mid-century.At the same time,vulnerable segments of the population must be protected through supportive policies to ensure a socially just green

44、transition.Emissions trading remains pivotal in this context and lies at the core of decarbonization strategies in an increasing number of jurisdictions.This 10th edition of the ICAP Emissions Trading Worldwide report provides a compre-hensive analysis of the latest developments and key trends in th

45、e ETS space from the past year.It includes a series of infographics that illustrate important ETS facts and figures,as well as detailed factsheets on all systems currently in force,under development,or under consideration.The report confirms the growing momentum for the ETS developments,as the numbe

46、r of systems continues to rise.There are now 28 such systems in force,three more than last year,with 20 more systems under development or consideration across the world,particu-larly in the Latin American and Asia-Pacific regions.For the first time,we see concrete steps towards emissions trading bei

47、ng taken in Africa.The share of global emissions covered by an ETS remains unchanged at 17%,as the increase in coverage thanks to the introduction of new systems was offset by the overall reduction in emissions under ETS caps as is expected from systems designed to reduce emissions.Despite the chall

48、enging and unprecedented global backdrop,existing systems showcased maturity and proved to be remarkably resilient to significant external shocks.Systems currently in operation have weathered an eventful year without major disruptions.After making significant gains in 2021,prices in most systems sta

49、rted and ended 2022 at around the same levels,despite some fluctuations over the course of the year.The observation that allowance prices did not rise in 2022 is worth noting in the context of the ongoing energy crisis and its impacts on consumers,who have experienced significant rises in the consum

50、er price index as well as its energy component.Emissions trading confirmed itself to be a valuable source of revenues as 2022 marked another record,with more than USD 63 billion of actioning proceeds collected in a year.As a result of higher allowance prices and an increasing use of auctioning,more

51、than half of the total revenue raised by ETSs since 2008 was collected in 2021 and 2022,with many govern-ments channeling these resources back into further climate action,subsidizing emerging technologies,or supporting lower-income households.The report also features a collection of deep-dive articl

52、es written by policymakers and experts from key jurisdictions around the world,which offer valuable insights into the rapidly evolving ETS landscape.The Russian invasion of Ukraine in early 2022 made Europes energy dependence painfully clear,just after the EU committed to becoming climate neutral by

53、 2050 and reduce net emissions by 55%by 2030,compared to 1990.The war has significantly impacted climate policy.In his article,Jos Delbeke of the European University Institute and former Direc-tor-General of the European Commissions DG for Climate Action,raises the question:are energy security and d

54、ecarbonization compatible goals?He lays out the importance of combining Europes energy security and climate objectives and engaging in strong bilateral and multilateral cooperation.Looking ahead,the EU must leverage its Green Deal,energy policies,and carbon pricing mechanisms to accelerate the trans

55、ition.As the energy crisis has taken hold,there are further lessons to be learned as we push ahead with carbon pricing.An article by Ottmar Edenhofer and Michael Pahle of the Potsdam Institute for Climate Impact Research highlights how the EU has successfully upheld its climate ambitions,despite con

56、cerns that carbon pricing would directly expose house-holds to increased costs and wane public support for broader climate policy.The authors emphasize the need to integrate all reforms with other policy domains,such as social policy to protect vulnerable communities and energy security to leverage

57、its synergy with climate policy and foster European solidarity.The EU has moved rapidly to address the urgent climate crisis,committing to reducing net GHG emissions by at least 55%below 1990 levels by 2030.An article by the European Commission details how the blocs climate and energy policy,includi

58、ng the EU ETS,has been undergoing revisions to support this goal.These reforms include a reduced cap,expansion of the ETSs coverage to maritime transport,and more concerted use of the Innovation Fund and Modernisation Fund to catalyze the deployment of low-carbon technologies and provide support to

59、lower-income Member States.The new EU ETS 2 will incentivize emissions reductions from road transport,buildings,and industry not covered by the existing system.The accompanying Social Climate Fund will channel revenues from emissions trading to provide dedicated support to vulnerable citizens and bu

60、sinesses.In these ways,the EU is committed to advancing the green transition across the entire economy while leaving no one behind.Next,the United Kingdom reflects on its progress to further develop the UK ETS and engage with stakeholders,particularly amid the ongoing energy crisis.The UK ETS is at

61、the heart of delivering on the UKs net zero target.The article emphasizes the importance of comple-mentary policies and a holistic decarbonization approach to addressing climate change and the challenge of increasing costs.It also highlights the role that carbon leakage mitigation measures and the e

62、xpansion of the scheme to new sectors could play in providing certainty to the market and decarbonization efforts.Meanwhile across the Atlantic,Qubecs cap-and-trade system,launched in 2013 and linked to Californias program since 2014,is going strong after 10 years.Over time,it has proven that it can

63、 withstand external shocks.As it looks ahead,Qubec is prioritizing a just and 1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents8ICAP Status Report 2023Executive Summaryequitable transition towards a green economy.In its article,Qubec shows how its collab-oration with Cal

64、ifornia has been fruitful,how it has channeled ETS revenues into further climate action,and how the high share of renewables in its electricity grid have shielded it from the worst impacts of the energy crisis.In its article,Chile shows how carbon pricing policies can be tailored to specific context

65、s.The country has had a carbon tax in place since 2017.Starting in 2023,entities covered under the tax will be able to comply with their obligations using offsets stemming from sources not regulated by the tax.This new system aims to promote mitigation in other sectors and develop a domestic market

66、for offsets.Looking ahead,under the banner of the framework law on climate change,the Ministry of Energy is looking into establishing a system of GHG emission caps,similar to a baseline-and-credit system for high-emitting sectors,as well as a cap-and-trade system for the power sector.Both instrument

67、s would support a cost-effective transition towards carbon neutrality.The New Zealand Emissions Trading Scheme(NZ ETS)has been the countrys primary tool to help reach its climate targets.In its article,New Zealand describes the role of its first Emissions Reduction Plan,which sets the course to net

68、zero by 2050 and highlights emissions pricing as a key instrument.The plan compiles a host of regulations and supporting policies that will help unlock new ideas,businesses,and markets to cost-effectively drive climate action.The article points to the importance of addressing the distributional impa

69、cts of the NZ ETS and weaving such considerations into the policy design itself.YEAR IN REVIEWThroughout 2022,ETSs across the globe have undergone a series of developments,including policy decisions spurred by rising prices caused by the energy crisis.New systems are also being introduced as jurisdi

70、ctions work to design and implement ETSs.Below,we summarize major updates from the systems currently in force(i.e.,those already in operation)and those under development(i.e.,where a mandate for an ETS is in place,and where system rules are currently being developed but not yet in force),as well as

71、other jurisdictions which are considering an ETS.EUROPE AND CENTRAL ASIAAustria:Austrias national ETS began operation in October.Originally set to begin in July,the system was suspended for three months as part of the Austrian governments energy price relief plan.By its launch in October,regulated e

72、ntities had to open a registration account on the dedicated platform.Late registration was possible without penalty until 1 February 2023.European Union:In December,the EU Parliament and Council reached an agreement on a major reform of the EU ETS,strengthening its ambition in order to achieve the E

73、Us 55%emissions reduction target for 2030.The reform includes a tighter cap for the existing ETS for electricity,industry,and aviation and a phase-in of the maritime sector from 2024 onward.A phase-out of free allocation for some industrial sectors will be accompanied by a phase-in of a carbon borde

74、r adjustment mechanism from 2026.Moreover,the EU decided to introduce a new EU ETS for buildings,road transport,and process heat in industry in 2027 or,in case of high energy prices,in 2028.Germany:2022 marked the second year of operation of the German ETS.According to an evaluation report published

75、 in November,the system has been successfully implemented.As of October,1,700 regulated entities and 500 intermediaries had opened a registry account.The first compliance period covering 2021 concluded in September,with a compliance rate of 98%in terms of surrendered allowances.Kazakhstan:In July,a

76、new National Allocation Plan for 2022-2025 was approved,estab-lishing a cap of 163.7 MtCO2 for 2023.Montenegro:The operation of the Montenegro ETS was negatively affected by several changes of government throughout 2022,which caused major delays in the adoption of the annual allocation plan.The gove

77、rnment set up a working group mid-year to review the countrys climate legislation,including the ETS.This work is still ongoing as of January 2023,with the adoption of the revised“ETS Decree”and“Climate Law”expected by April 2023.Sakhalin(Russia):In March,a“Federal Law on Conducting an Experiment to

78、Limit GHG Emissions in Selected Federal States of the Russian Federation”was approved in its final reading,introducing mandatory emissions reporting and verification requirements for regulated entities in the Sakhalin region and obliging them to comply with the allocated emissions allowances.The law

79、 also sets a legal basis for“allowance circulation”.As a mandatory scheme to regulate GHG emissions,the Sakhalin pilot ETS was meant to launch in September but has been delayed pending cap-setting and allowance allocation processes.Switzerland:A market stability mechanism was introduced in the Swiss

80、 ETS.Due to a large number of allowances in circulation,the auction volume was reduced by 50%.A revision of the“CO2 Act”that covers the period 2025-2030 is in process.Trkiye:Trkiye held its first Climate Council meeting with participation by public and private institutions and NGOs.The Councils reco

81、mmendations included the launch of a pilot ETS in 2024 to align the development of a national ETS with the countrys 2053 net zero target.These recommendations were reflected in Trkiyes Medium-Term Program for 2023-2025 and,following approval from the president,published in the Official Gazette.1 Pra

82、ctitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents9ICAP Status Report 2023Executive SummaryUkraine:The design process of the Ukrainian ETS has been severely impacted by the Russian war of aggression,making it impossible to finalize the draft instruments for cap-setting and all

83、owance allocation developed during the year.A stakeholder engagement process was nevertheless carried out and finalized in early 2023.United Kingdom:The UK launched a major consultation on scheme reforms addressing several issues,including how to align the cap trajectory with the countrys net zero t

84、arget and expanding the schemes sectoral coverage.An initial response with changes to be imple-mented from 2023 was published in August,while the full response is expected in 2023.NORTH AMERICACalifornia:In December,the Board of the California Air Resources Board(CARB)adopted the states Final 2022 S

85、coping Plan,which establishes the strategy to meet Californias emissions reduction targets.In light of the additional emissions reductions now expected by 2030,CARB announced it would review all major programs,including the states Cap-and-Trade system.CARB will report to the state legislature on any

86、 potential program changes by the end of 2023.Canada Federal:All Canadian provinces and territories had to hand in proposals for carbon pricing systems for the 2023-2030 period.These must meet the strengthened federal benchmark criteria of CAD 65(USD 50)per tonne of CO2 equivalent in 2023,increasing

87、 by CAD 15 per year to CAD 170/tCO2e in 2030.In November,the Canadian government announced which proposals had been approved and where the federal carbon pollution pricing“backstop”system would apply from 2023.Massachusetts:As a result of the review of the“310 CMR 7.74”regulation which concluded at

88、the end of 2021,the Massachusetts Department of Environmental Protection started auctioning future vintage allowances in June and September.In each of the auctions,MassDEP offered almost 400,000 2023 vintage allowances,equivalent to 5%of the 2023 cap.New York State:In January 2023,New Yorks Climate

89、Action Council issued a Final 2022 Scoping Plan that proposes a range of policies and actions to meet the States carbon neutrality goal in 2050 including an economy-wide cap-and-invest program.When adopted,the program will cover all emitting sectors under an enforceable and declining cap,with the ca

90、ps for 2030 and 2050 corresponding to state-wide emission limits.The Governor has directed the Department of Environmental Conservation and the New York State Energy Research and Development Authority to develop ETS regulations before January 2024.North Carolina:In an Environmental Management Commis

91、sion Air Quality Committee meeting in July,North Carolinas Department of Environmental Quality provided infor-mation on how a proposed regulation to become a participating state in RGGI deviates from the existing RGGI Model Rule.Among others,the North Carolina regulation would cover industrial units

92、,regardless of grid connectivity,and emissions from biomass/biofuel.Consideration of the RGGI rule by North Carolinas Environmental Management Commission has been delayed to 2023.Nova Scotia:In 2023,the provinces cap-and-trade system is being replaced by an output-based pricing system(OBPS),approved

93、 by the federal government in November.The cap-and-trade system will be phased out after the 2022 compliance deadline in December 2023,with two more auctions scheduled during the year to allow entities to purchase allow-ances for their verified 2022 emissions.Oregon:In March,Oregons Department of En

94、vironmental Quality(DEQ)distributed allow-ances to the 18 covered fuel suppliers currently subject to the emissions cap under the Climate Protection Program.The distribution of allowances was based on the program rules for the first compliance period,which began in 2022 and includes calendar years 2

95、023 and 2024.In September,DEQ launched a voluntary trading platform and the forms needed for trading between transferring and acquiring covered fuel suppliers.Pennsylvania:In April,the final regulation to establish an ETS in Pennsylvania and to participate in RGGI was published.The regulation is cur

96、rently being challenged by several lawsuits.Until legal proceedings are concluded,the Pennsylvania Department of Environ-mental Protection will not take steps to implement or enforce the RGGI regulation.Qubec:In September,Qubec adopted a new approach for free allocation,which will apply from 2024.Wi

97、thout reform,freely allocated allowances were forecast to represent an increasing share of the total cap,as industrial output grew.It is expected that the new approach will see a reduction of free allocation of 2.9 million allowances between 2024-2030.Regional Greenhouse Gas Initiative:RGGI states a

98、re currently conducting the Third Program Review.As per the timeline for the program review released in November,an updated draft Model Rule would be released in fall 2023,with the program review concluding in December 2023.Washington:Following a year of intensive preparations,Washington states new

99、cap-and-invest program started operating in January 2023.The systems design closely resembles that of Californias program.Washington began a public process to explore the possibility of linking to other cap-and-trade systems.LATIN AMERICA AND THE CARIBBEANChile:The government published its 2022-2026

100、 Energy Agenda in August.It states that a pilot ETS project for the energy sector will be developed to evaluate the role of this instrument in achieving emissions reductions and a just transition in a cost-effective manner.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Content

101、s10ICAP Status Report 2023Executive SummaryColombia:The“Climate Action Law”(Ley de Accin Climtica),which came into force in December 2021,sets a goal to fully implement an ETS by 2030.This law also appoints an independent group of experts to generate recommendations to promote and develop carbon mar

102、kets in Colombia.These recommendations are to be considered by the environment and finance ministries.Mexico:The operational phase of the Mexican ETS began in January 2022.The Ministry of Environment and Natural Resources is expected to publish regulations for the operational phase of the ETS in the

103、 first half of 2023.AFRICANigeria:In August,the Nigerian Minister of the Environment announced that the country has started activities towards establishing a national ETS.The National Council for Climate Change,established in November 2021,is responsible for developing the system.Key design elements

104、 such as the timeline and sectoral scope remain to be decided.The proposal will go through stakeholder engagement before decisions are made on features such as the allocation framework.ASIA-PACIFICChina:With the experience from the first compliance period,the Ministry of Ecology and Environment upda

105、ted MRV guidelines in March,with the aim of improving data quality.In November,the Ministry released draft allocation plans for 2021 and 2022 for public consul-tation,significantly tightening benchmark values for coal-fired power plants.Chinese Pilots:All Chinese regional pilots continued trading an

106、d compliance.Besides regular activities,Beijing,Chongqing,Guangdong,Shanghai,Shenzhen,and Tianjin released or updated their Tan Pu Hui offsets framework to incentivize individual or small-scale GHG reduction projects.Credits generated from these projects will be used for compliance purposes in these

107、 pilots.India:The Indian government took steps towards the establishment of a national carbon market.A draft blueprint by the Bureau of Energy Efficiency proposes a phased intro-duction involving two mechanisms:a voluntary market supported by a domestic project-based offset scheme and a compliance m

108、arket with mandatory participation for regulated entities.The voluntary market is expected to enter into force by July 2023,followed by the compliance market.Indonesia:In October,the Ministry of Environment and Forestry released implementing regulations for the upcoming national ETS,with details on

109、offsets,sectoral roadmaps,MRV procedures,and institutional arrangements.Sectoral regulations are currently under devel-opment.In January 2023,the Ministry of Energy and Mineral Resources announced that the mandatory,intensity-based ETS for the power sector,initially set to begin in 2022,would launch

110、 in February and cover 99 coal-fired power plants.Japan:In February,the government announced the upcoming Green Transformation(GX)League,a baseline-and-credit system for companies expected to become fully opera-tional in April 2023.This will build upon existing carbon trading systems such as the JCM

111、 and J-Credit scheme.Although participation in the GX League is voluntary,compliance is mandatory once formally a participant.The government is currently working on the rules for the GX League,which will become fully operational in April 2023.In February 2023,the Cabinet passed the basic GX plan,a 1

112、0-year roadmap which includes initial arrangements for a mandatory national ETS from 2026.Malaysia:The Ministry of Natural Resources,Environment,and Climate Change will conduct a study under the 12th Malaysia Plan to develop a policy and design framework for the domestic ETS.The study is looking int

113、o ETS market design frameworks,registration,and alignment with international standards and is expected to commence in 2023.New Zealand:After the major reforms of previous years,the New Zealand government continued to make incremental improvements to the operation of the NZ ETS.Changes coming into ef

114、fect for the forestry sector in 2023 include a shift to averaging accounting and a new“permanent forest”category.Decisions were also taken to tighten the eligibility and accounting rules for industrial allocation.Consultations continue on an improved market governance framework,as well as a carbon p

115、ricing mechanism for biological emissions from agriculture.Republic of Korea:In November,the government announced several near-term changes to the K-ETS.These include:increasing incentives to reduce emissions and facilitate low-carbon investment by issuing more free allowances to the most efficient

116、covered entities;encour-aging trading and mitigating price volatility by opening up the ETS to more financial firms and increasing the allowance holding limit;facilitating the conversion of international offset credits to Korean Credit Units;strengthening MRV;and increasing support for small busines

117、ses and new entrants.Thailand:The Thailand Voluntary ETS(T-VETS)pilot project was extended to the Eastern Economic Corridor area,a key industrial region of Thailand.Early in the year,the government also published rules and guidelines for carbon credit trading,which were followed in September by the

118、launch of the carbon credit trading platform FTIX.Vietnam:In July,Vietnam issued a Decision by which the country commits to achieving net zero GHG emissions by 2050,with a mid-term target of 43.5%below BAU levels by 2030.This decision follows“Decree 06/2022/ND-CP”,which outlines a roadmap for the im

119、ple-mentation of an ETS with a declining cap corresponding to Vietnams NDC.The pilot ETS is expected to start in 2026 and become fully operational by 2028.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents11ICAP Status Report 2023Executive SummaryPRACTITIONERINSIGHTS01EUR

120、OPEAN UNIVERSITY INSTITUTE 13POTSDAM INSTITUTE FOR CLIMATE IMPACT RESEARCH 15EUROPEAN COMMISSION 17UNITED KINGDOM 19QUBEC 21CHILE 23NEW ZEALAND 241 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents12ICAP Status Report 2023EUROPEAN UNIVERSITY INSTITUTETHE IMPACT OF THE WAR

121、IN UKRAINE ON EUROPES CLIMATE AND ENERGY POLICYJos DelbekeEuropean Investment Bank Chair on Climate Policy and International Carbon European University Institute and former Director-General of the European Commissions DG for Climate ActionThe invasion of Ukraine by Russia made Europes energy depende

122、nce painfully clear soon after the EU committed itself to become climate neutral by 2050 and reduce its net emissions by 55%by 2030 compared to 1990.The war changed the policy context for reaching these climate goals significantly and the question arises whether energy security and decarbonization a

123、re compatible goals.The following elements stand out.Using all available non-Russian energy resources in the short-termThe short-term outlook for energy markets looks difficult.Prices for coal,oil,and in particular natural gas,have risen significantly,with knock-on consequences for the price of elec

124、tricity.Emergency policies were developed to deal with the social and economic impact on households and businesses,but the more important issue was to mobilize all available energy resources to substitute for Russian supplies.Scarcity of energy suddenly made it more expensive in Europe.Measures take

125、n to replace supply have been diverse,ranging from suspending the phase-out of old nuclear power stations,to the ramping up of LNG purchases from a wide range of supplier countries,and the use of more coal and lignite in older power stations.The decades-long decline in EUs greenhouse gas emissions,p

126、rimarily through the switching of power generation from coal to gas and the expansion of renewables,was reversed.However,this should be temporary,and,in the meantime,it is important to avoid new fossil-fuel-re-lated investments whose climate-compatibility are questionable in the medium-term,and unac

127、ceptable in the longer-term.Double-down on energy efficiency improvements and investments in renewablesPolicies developed under the European Green Deal,not least those on renewable energy and energy efficiency,were intended to make the European economy more resilient and less dependent on imported e

128、nergy.The Ukraine crisis has only emphasized the urgency of these objectives,and efforts are being reinforced.Moreover,energy consumers have reacted to the increase in energy prices.Many households have made deliberate efforts to save on their energy use,insulate their homes,install heat pumps,or fi

129、t solar panels onto their rooftops sooner than they otherwise would have done.Instead of the many untargeted social measures to generally shield consumers,government support should be focused on supporting poorer households that cannot afford higher energy costs,let alone make such investments.For t

130、hese efforts to be most effective,governments must simplify overly lengthy and complicated permitting procedures,support the electrification of heating,transport,and industry,and intensify investments in grid infrastructure,storage,and digitalization.While the challenges are acute,price support meas

131、ures must be temporary and not undermine long-term price signals towards decar-bonization and saving energy.Resisting direct price interventions in energy and carbon markets Some are proposing major changes to the current energy market regulation.They are criti-cizing the design of European wholesal

132、e electricity markets whereby the marginal plant determines the price of electricity at any given moment in time.Suggestions have also been made to impose energy price caps at the European level.However,care must be taken to avoid unwanted side effects,such as making the short-term supply problems e

133、ven worse by undermining investment incentives or by diverting energy resources away from Europe.Equally,discretionary price interventions on Europes carbon market must be resisted.The Market Stability Reserve functioned well and supported a relatively stable price in the range of EUR 60-90(USD 63-9

134、5)per tonne of CO2.Maintaining this price level represents a strong long-term incentive to bring forward low carbon innovation and to support the emergence of new technologies,such as green hydrogen.Such innovations are essential for delivering climate neutrality.This price level also generates sign

135、ificant auctioning revenues that should be consistently used to encourage the deployment of low-carbon investments.Equally,the Innovation and Modernisation Funds have become important sources of finance to accel-erate the climate transition and at the same time to improve Europes long-term energy se

136、curity.Policies should support and not thwart the functioning of markets as energy and carbon prices guide consumers towards using less and choosing more climate-friendly energy.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents13ICAP Status Report 2023European University

137、 InstituteSupporting industry to invest in low carbon technology The European Green Deal supports the development of new climate-neutral technol-ogies such as green steel,cement,chemicals,non-ferrous products,or hydrogen.This is an opportunity to reduce the EUs reliance on fossil fuels,provided rene

138、wable energy deployment receives a huge boost.Across industries,the first pilot installations are already being put in operation,but a massive scaling up of these industrial technologies will be key.Infrastructure investments for the transport of renewable electricity and hydrogen,or for storage of

139、captured carbon,should facilitate this scaling up.The EU is unlikely to be fully autonomous in energy and materials,because the supply chains of renewable and nuclear energy resources,as well as green hydrogen and associated products,will inevitably also involve non-EU countries.A new geopolitical s

140、trategy is urgently needed to diversify essential imports,whether of green hydrogen from places where it can be produced cost-effectively,or the rare earths and precious metals needed for an electrified economy.ConclusionThe EU has lots of opportunities to combine its energy security and climate obj

141、ectives.A short-term temporary deviation from purely climate considerations must be accepted as necessary in the current circumstances.Fortunately,in the medium-and longer-term,the EUs Green Deal,together with energy and carbon pricing policies,will accelerate the energy transition and enhance secur

142、ity.In addition,the EU must engage in strong bilateral and multilateral cooperation on energy,industry,trade,and climate,while reducing its dependence on any one country for its essential imports.If the EU has not learnt that lesson now,it never will.Policies should support and not thwart the functi

143、oning of markets as energy and carbon prices guide consumers towards using less and choosing more climate-friendly energy.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents14ICAP Status Report 2023European University InstitutePOTSDAM INSTITUTE FOR CLIMATE IMPACT RESEARCHL

144、ESSONS FROM THE ENERGY CRISIS FOR THE WAY FORWARD FOR CARBON PRICINGOttmar Edenhofer&Michael Pahle Director and Chief Economist&Working Group Leader Potsdam Institute for Climate Impact ResearchDespite being hit by an energy crisis,the EU has lived up to its aspired climate leadership and adopted an

145、 ambitious reform of its ETS last December.In summer 2021 the EU Commission proposed to tighten the cap of the existing EU ETS for energy and industry and to establish a second ETS(ETS 2)for the building and transport sector from 2027.The ETS 2 proposal drew particularly heavy pushback since it woul

146、d directly expose households to carbon pricing,bearing the risk that public support for EU climate policy would wane.Opposition only grew stronger as energy prices surged in the fall of 2021,which turned into a full-scale energy crisis when Russia invaded Ukraine in February 2022.Natural gas prices

147、climbed even further and became highly volatile,peaking at twentyfold the pre-crisis level in August.Given the circumstances,many observers thought it likely that any policy reform to make fossil energy even more expensive would fail.But their concerns proved wrong.On 18 December 2022,the three main

148、 executive EU institutions agreed on the reform,which the EU Parliaments lead negotiator dubbed the EUs biggest climate law ever.Many factors helped in getting to an agreement,among them the realization that climate policy and energy security can be highly synergetic and the great dedication of the

149、lead negotiators as well as the Czech EU Presidency.But major concessions that may eventually impair future stringency had to be made,which reflects the fact that the parties negotiated the agreement amidst an energy crisis.The first concessions were provisions to keep the allowance price low in the

150、 ETS 2 in the first years of operation,including an“emergency brake”to delay implementation if oil and natural gas prices are too high.Moreover,while a new Social Climate Fund(SCF)will address the distributional impacts of the new ETS 2,its implementation principles are rudimentary and arguably leav

151、e too much leeway for broad income support.Both issues raise concerns that the ETS 2 might either be too soft to deliver the 2030 climate targets or that in the event of high demand for allowances and steeply rising prices,political support for the system may“crack”politically.To deal with these con

152、cerns,it is instrumental to increase the ETSs political robustness,and thereby“proof it“against future shocks and crises.A promising way forward in that regard is dedicated integration with other policy domains.The first domain where such integration is needed is social policy.The SCF aims to ensure

153、 that funds from auction revenues are used to(1)compensate vulnerable house-holds,and(2)fund green investments.While funds to be used for(1)are capped,this never-theless leaves an important trade-off unsolved:what share of auction revenues should be used for which purpose?A largely unacknowledged co

154、nsideration here is that targeting investment support to the needs of vulnerable groups would reduce the need for compen-sation in the long run.Furthermore,the right balance between the two funding purposes has become even more important since the pandemic and the energy crisis have cut deeply into

155、government budgets and now even threaten the financial stability of the Eurozone.A major reason for the budget stress is that compensation and support measures have rarely been targeted at groups that are really in need.The energy crisis laid bare this structural shortcoming.It is thus clear that es

156、tablishing suitable mechanisms for targeted compensation is essential,because the SCF needs to build on them.Designing targeted measures in turn requires the consideration of existing social policy and its norms,notably the use of proper indicators for energy poverty and vulnerability.It also requir

157、es the creation of mechanisms for direct financial compensation,which so far do not exist in many EU member states.Both are crucial to enable targeted compensation and thus ensure social fairness at the lowest cost.A major reason for the budget stress is that compensation and support measures have r

158、arely been targeted at groups that are really in need.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents15ICAP Status Report 2023Potsdam Institute for Climate Impact ResearchA second domain where integration is promising is energy security.As mentioned,the energy crisis h

159、as clearly shown that climate policy can be highly synergetic with energy security,at least in Europe.Ambitious climate policy reduces the dependency on(mostly imported)fossil fuels by replacing them with(mostly domestic)renewable energy sources.However,during the transitional period in which Europe

160、an countries will still need fossil fuel imports,policy is needed that ensures(a)imports are sufficiently diverse,and(b)exporting countries are politically stable and reliable trade partners.Here carbon pricing could play a role,especially if implemented as an upstream system.The carbon price could

161、be adjusted to reflect energy security considerations through,e.g.,a country and fuel-specific markup:the higher the share of imports from a particular country and the less stable its political system,the higher the markup would be.It is clear that many legal,political,and economic challenges would

162、need to be overcome,e.g.,how to account for indirect imports through third-party countries.But it is a very transparent approach,which could foster European solidarity and is a better common policy for energy security than the currently-planned joint purchases of natural gas by member states.In summ

163、ary,the energy crisis in Europe has acted as a stress test for carbon pricing.It has shown what can happen if energy prices rise to(very)high levels,as will foreseeably be the case when climate policy becomes more ambitious.The main lesson to be learned is that making carbon pricing more politically

164、 robust against higher prices,and also unantici-pated shocks,is essential for the way forward.To that end,dedicated integration with other policy realms,such as social development and energy security,has considerable potential to achieve an equitable low-carbon transition at lowest cost.It is now on

165、 policymakers to follow up on this lesson in the spirit of Churchills never let a crisis go to waste.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents16ICAP Status Report 2023Potsdam Institute for Climate Impact ResearchEUROPEAN COMMISSIONLEVERAGING EMISSIONS TRADING IN

166、THE EU TO FACILITATE A GREEN AND SOCIALLY JUST TRANSITIONBeatriz Yordi Director of European and International Carbon Markets,Directorate-General for Climate Action,European CommissionWhilst the world has faced severe crises in recent years,the climate crisis has not become any less urgent,and the Eu

167、ropean Unions(EU)commitment to climate action through the European Green Deal persists.In the“European Climate Law”,the EU has legally committed to becoming climate neutral by 2050,with a first milestone of reducing net greenhouse gas emissions to at least 55%below 1990 levels by 2030.To this end,th

168、e EU has been revising its climate and energy policy framework since 2021,including the EU Emissions Trading System(EU ETS).The revision coincided with the unprecedented energy crisis brought by Russias invasion of Ukraine.Just as with the economic recovery from the COVID-19 pandemic,the European Co

169、mmission and Member States are orienting the EUs response to the energy crisis around the green transition.The“REPowerEU Plan”,adopted in May 2022,pursues measures to address high energy prices and rapidly reduce the EUs dependence on Russian gas.It also makes a case for accelerating the clean energ

170、y transition,building on the European Green Deals ambition and objectives to tackle the climate crisis and foster energy security,resil-ience,and cost-efficiency.The EU ETS is a key pillar of the implementation of the European Green Deal.It regulates emissions from electricity and heat generation,in

171、dustry,and aviation,representing around 40%of the EUs total emissions.The system provides an economic incentive for reducing emissions whilst raising revenues for Member States to invest in the green transition.Since its launch,the EU ETS has helped drive down emissions from energy and industry inst

172、al-lations by 34.6%by 2021.In parallel,the system has raised over EUR 100 billion(USD 105 billion)in auction revenues.An important political agreement In December 2022,the European Parliament and the Council of the EU reached a political agreement to revise the EU ETS to contribute to the more ambit

173、ious 2030 climate target.Emissions under the EU ETS will now be reduced by 62%by 2030,compared with 2005 levels.The sharper reductions take effect already from next year(2024),delivering a substantially greater cumulative reduction over the next seven years.It is essential that action on climate cha

174、nge is taken economy wide.The agreement contributes to this by extending the EU ETS to the blocs fair share of emissions from maritime transport.The systems application to aviation is also strengthened,with a transition to full auctioning from 2026.In addition,a review in 2027 will consider whether

175、the EU ETS should require a stronger contribution from international aviation to climate action.In parallel,a new system(ETS 2)is being created to incentivize emission reductions from road transport,buildings,and industry not covered by the existing market-based system.It will regulate emissions ups

176、tream,meaning the compliance obligation will fall on fuel companies rather than end consumers.The new system should apply from 2027,1 comple-menting Member States efforts to reduce emissions under national targets.Considering the increased ambition and expanded application of emissions trading,the a

177、greement mobilizes the necessary enabling framework for the green transition.It commits more resources to funding energy transformation and industrial innovation,as well as helping vulnerable groups and microenterprises to invest in decarbonization.These resources include Member States auction reven

178、ues and dedicated funds:the EU ETSs Innovation and Modernisation Funds and the new Social Climate Fund will all have an important role in facilitating a green and socially just transition.Innovation FundThe ETS Innovation Fund finances the commercial demonstration and deployment of innovative low-ca

179、rbon technologies and industrial solutions to decarbonize Europes energy-intensive industries,as well as energy storage and carbon capture,use,and storage.With a currently-estimated budget of over EUR 34 billion2(USD 35.7 billion),it is one of the largest grant-funding programmes in the world,and it

180、 is funded entirely by the EU ETS.Since 2020,the fund has awarded over EUR 3.1 billion(USD 3.3 billion)to some 70 projects in a wide variety of sectors including chemicals,steel,cement refineries,green hydrogen production,and renewables.The latest call for large-scale projects under the Innovation F

181、und was launched in November 2022,with a budget of EUR 3 billion(USD 3.1 billion).It focuses on the“REPowerEU Plan”priorities,specifically hydrogen and electrification,clean-tech manufacturing,and mid-size pilots.1 Possibly postponed to 2028 in the event of exceptionally high energy prices.2 Assumin

182、g a carbon price of EUR 75/tonne CO2e.It is essential that action on climate change is taken economy wide.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents17ICAP Status Report 2023European CommissionWith the agreed revision of the EU ETS,the Innovation Fund is being stre

183、ngthened and adapted to the systems increased ambition.The funds total size is estimated to be increasing by at least 18%3 and dedicated topics are being introduced in calls for proposals,including for the maritime sector.The Innovation Fund will also operationalize competitive bidding through carbo

184、n contracts for difference.Modernisation FundAlongside support for innovation-driven transformation of the EU ETS sectors,the system also addresses Member States different starting points in the green transition challenge.The ETS Modernisation Fund is one of its solidarity mechanisms to help lower-i

185、ncome Member States4 decarbonize and develop their energy systems.Currently,at least 70%of the budget,projected to be EUR 48.2 billion(USD 50.7 billion)in 2030,5 must be dedicated to priority projects that advance the beneficiary countries transition to climate neutrality.Since 2021,around EUR 5 bil

186、lion(USD 5.3 billion)has already been made available for investments in energy efficiency improvements,renewables,energy storage,and the modernization of power grids in the beneficiary countries.The agreed revision of the EU ETS increases the size of the Modernisation Fund(by 2.5%of the allowances u

187、nder the cap)and expands its support to Greece,Portugal,and Slovenia.Furthermore,an even bigger share of the fund is committed to priority investments(up to 90%)and the limitations on funding fossil fuel projects are strengthened.Social Climate Fund and auction proceeds The European Parliament and C

188、ouncil of the EU have also agreed to create a Social Climate Fund alongside the new ETS 2.It will provide dedicated support to Member States to help vulnerable citizens and microenterprises undertake green investments in energy efficiency,decarbonization,and sustainable transport,such as home insula

189、tion,heat pumps,solar panels,and electric mobility.The Social Climate Fund will start operating before the ETS 2 launches.In the period 2026-2032,it will mobilize an estimated EUR 86.7 billion(USD 91.3 billion)across the EU,financed from auction revenues together with 25%of national contributions.Al

190、ongside the funding for green investments,Member States will also have the option of spending up to 37.5%of the funds resources on direct income support for vulnerable households and transport users.3 Increase in the share of allowances,with a potential further increase dependent on the free allocat

191、ion conditionality.4 Bulgaria,Croatia,Czechia,Estonia,Hungary,Latvia,Lithuania,Poland,Romania,and Slovakia.5 Assuming a carbon price of EUR 75/tonne CO2e.Finally,to complement the substantial spending on climate that should take place from the EU budget,Member States agreed to spend the entirety of

192、their emission trading revenues from the EU ETS and ETS 2(or an equivalent amount)on climate-and energy-related projects and to address the social impacts of the transition.Member States already report that they use,on average,75%of their revenues this way.This new commitment will ensure that the po

193、lluter pays principle is fully leveraged to bridge the green transition investment gap and benefit EU citizens.On the way to becoming climate neutral by 2050,the EU must advance the green transition across the entire economy in a timely and consistent manner.To this end,a potent enabling framework i

194、s necessary to advance systemic change and drive innovation yet leave no one behind.The strengthened and expanded role of emissions trading in the EU will be key to incentivising and enabling the transition.The agreement is now in the process of being formally adopted by the Parliament and the Counc

195、il.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents18ICAP Status Report 2023European CommissionUNITED KINGDOMTAKING STOCK OF THE UK ETS AFTER TWO YEARS OF OPERATIONCharlie Lewis Deputy Director for Emissions Trading,Department for Business,Energy and Industrial Strategy

196、(BEIS)How the UK ETS is responding to the energy crisis The UK ETS was established in 2021,following the UKs departure from the EU.Despite a long history of emissions trading in the UK,this is still very much a new market and it has had to contend with a unique set of challenges during its early yea

197、rs.In 2022,as with many other jurisdictions,we had to balance running an ETS in the context of high energy prices with making progress to develop our scheme.This was also a year that saw historic heatwaves a reminder that the effects of climate change are already being felt around the world.In this

198、article,we reflect on our work to develop the scheme,the context of the energy crisis and the UKs response to it,and the challenges and opportunities that lie ahead for carbon pricing.Developing the UK ETSThe UK ETS is at the heart of delivering on the UKs ambitious net zero target-focusing on our a

199、mbitions for the UK ETS will ensure the scheme contributes to driving the necessary pace and scale of decarbonization and supports the increased uptake of low carbon energy.At the same time,we are acutely aware that carbon pricing adds to the costs faced by businesses,and that a holistic approach to

200、 supporting decarbonization is required.The framework of the UK ETS offers businesses both the certainty needed on overall emissions reductions and the flexibility needed to choose how to react.In line with commit-ments in the governments Net Zero Strategy and in response to asks from industry for c

201、larity over the future of the scheme,in 2022 the UK ETS Authority1 ran a public consul-tation on how to align the schemes cap with a net zero consistent trajectory.This will send a clear long-term signal to businesses and will provide much-needed certainty.It will give businesses the confidence to i

202、nvest for 2050 and beyond in the transition to cheap,clean homegrown energy that is ending the reliance on fossil fuels and reducing exposure to volatile oil and gas prices on global markets.Innovation incentivized by the UK ETS can also make participants more productive in the long run,thereby redu

203、cing their long-term costs.1 Made up of the UK Government,Welsh Government,Scottish Government and Northern Irelands Department for Agriculture,Environ-ment and Rural Affairs.The consultation not only covered the cap alignment,but also addressed a host of related changes and started the process of e

204、xpanding the scheme to new sectors.We spoke to or received submissions from over 350 organizations to ensure we develop the scheme in a way that works for participants and the climate.Based on the feedback,this year we will confirm the details of the new cap trajectory and other design changes.The a

205、djusted cap and associated changes to the industry cap,which sets a ceiling on free allocation levels,will be implemented in 2024.We have guaranteed current levels of free allocation until 2026 to give confidence over carbon leakage support.Figure 1:A net zero consistent cap The currently legislated

206、 cap,which is not consistent with delivering net zero,will remain in place until end 2023.The illustrative trajectory for the net zero consistent cap,represented as a range,is shaded in blue.Support for businesses and householdsWe realize that this year business costs have risen across the board.Aba

207、tement options have become more expensive.Increases in scheme ambition have also driven ETS allowance prices higher in recent years.Reflecting the costs required to meet our targets,we recognize the importance of supporting firms across the UK with the costs of the transition to net zero.This is par

208、ticularly true in the current energy crisis,affecting households and businesses in the UK and across the globe.Figure 1:A net zero consistent cap Support for businesses and households We realize that this year business costs have risen across the board.Abatement options have become more expensive.In

209、creases in scheme ambition have also driven ETS allowance prices higher in recent years.Reflecting the costs required to meet our targets,we recognize the importance of supporting firms across the UK with the costs of the transition to net zero.This is particularly true in the current energy crisis,

210、affecting households and businesses in the UK and across the globe.To deal with the immediate issue of energy costs,the UK government has implemented policies to support UK households,notably through the Energy Bills Support Scheme(EBSS)and the Energy Price Guarantee.The EBSS is a GBP 400(USD 494)no

211、n-repayable government discount on electricity bills,granted to most households in Great Britain for the 2022-2023 winter.The Energy Price Guarantee protects customers from increases in energy costs by limiting the price suppliers can charge per unit of energy used.All households with a domestic ele

212、ctricity and/or gas contract with a licensed supplier are eligible to receive support,which is applied automatically.This winter,the Energy Price Guarantee is saving a typical household around GBP 900(USD 1111).The government is also targeting relief at businesses via the Energy Bill Relief Scheme(E

213、BRS),which provides a discount on wholesale gas and electricity prices.All businesses,voluntary sector,and public organizations whose energy is delivered via the gas or electricity grid are eligible for support,with the discounted wholesale rates automatically applied to energy bills.The currently l

214、egislated cap Range for the legislated net zero consistent cap Millions of UK ETS Allowances/Emissions(MT CO2eq)Range for the legislated net zero consistent cap1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents19ICAP Status Report 2023United KingdomTo deal with the immedi

215、ate issue of energy costs,the UK government has implemented policies to support UK households,notably through the Energy Bills Support Scheme(EBSS)and the Energy Price Guarantee.The EBSS is a GBP 400(USD 494)non-repayable government discount on electricity bills,granted to most households in Great B

216、ritain for the 2022-2023 winter.The Energy Price Guarantee protects customers from increases in energy costs by limiting the price suppliers can charge per unit of energy used.All households with a domestic electricity and/or gas contract with a licensed supplier are eligible to receive support,whic

217、h is applied automatically.This winter,the Energy Price Guarantee is saving a typical household around GBP 900(USD 1,111).The government is also targeting relief at businesses via the Energy Bill Relief Scheme(EBRS),which provides a discount on wholesale gas and electricity prices.All businesses,vol

218、untary sector,and public organizations whose energy is delivered via the gas or electricity grid are eligible for support,with the discounted wholesale rates automatically applied to energy bills.More directly related to carbon pricing,we announced in April that the long-running Energy Intensive Ind

219、ustries Compensation Scheme,which provides relief from ETS costs on businesses electricity use,will be extended for a further three years and the level of aid doubled.We will also consider strengthening the Energy-Intensive Industries Exemption Scheme,which relieves industries from other policy-rela

220、ted costs,such as renewable energy obligations and feed-in tariffs.These support schemes are provided in recognition of the fact that UK industrial electricity prices are higher than those of other countries.These support measures demonstrate how ETS revenues and wider government income can be reinv

221、ested to support people through the energy crisis.Equally,we are investing in a more efficient and lower-carbon future to meet our climate goals and reduce our exposure to such shocks.Across the economy,the UK Government has committed GPB 30 billion(USD 37 billion)of domestic investment for the gree

222、n industrial revolution,which will leverage up to GPB 90 billion(USD 111 billion)of private investment by 2030.We will continue to review whether these funds are sufficient to support the transition to net zero,and to ensure an equitable balance of contributions from the private and public sectors.T

223、he future of the UK ETSAlongside this support,robust and fair carbon pricing will be a key incentive for businesses.The changes to the cap will send a clear overall signal,and we will begin expanding the UK ETS to new sectors,such as waste and maritime transport,to bring that incentive to bear on mo

224、re of the economy.At the same time,we will continue to review how we distribute free allocations and consult further in 2023 to make sure we target support at sectors most at risk of carbon leakage.This will also provide an opportunity to consider the availability of decarbonization technol-ogies,to

225、 ensure that geographies with access to fewer abatement options are not treated unfairly in the transition to net zero.We will consider further changes to free allocation in the context of wider policy development,including other carbon leakage mitigation measures,which we will consult on in spring

226、2023.Decarbonization does not mean deindustrialization:we are determined that our industry will receive appropriate protection from competitors in areas with less stringent climate policies.Furthermore,Chris Skidmores government-wide“Mission Zero”review provides convincing arguments that the transit

227、ion to a net-zero economy is the growth opportunity of the 21st century.This outlines how the UK is well-placed to benefit from the increasing demand for net-zero goods and services if we make the right public and private investments,and that Government has an important role in facilitating this inv

228、estment by providing clarity,certainty,consistency,and continuity of policy.The energy crisis is a challenge for households,businesses,and governments alike,but it only increases the importance of decisive climate action.Equally,the sense of urgency and public pressure to act has risen,as climate ch

229、ange has made extreme weather events more frequent.We need to act everywhere,and emissions trading can be a vital part of the solution if we use it carefully and continue to make changes collaboratively.The energy crisis is a challenge for households,businesses,and governments alike,but it only incr

230、eases the importance of decisive climate action.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents20ICAP Status Report 2023United Kingdom20001820192020Million Tonnes CO2e6065507055758580GHG emissions Net emission balance2020 target QUBECQUBECS CAP-AN

231、D-TRADE SYSTEM:STILL GOING STRONG AFTER 10 YEARS!Qubecs cap-and-trade system,launched in 2013 and linked to Californias program since 2014,is still going strong,mainly because it was designed to withstand external shocks,such as the one induced by the recent pandemic and its aftermaths.For 2024-2030

232、,new rules for free allocation that are consistent with Qubecs climate objectives,and that will accelerate emitters investments in their climate transition,were introduced.Qubec strongly believes that a just and equitable transition towards a green economy is a key part of responses to crises like t

233、he one we are facing.Recently,Qubec released its 2020 Mitigation Goal Achievement Report.Greenhouse gas emissions in Qubec were 13.2%below 1990 levels in 2020,1 in good part because of the 1 Inventaire qubcois des missions de gaz effet de serre(gouv.qc.ca)COVID effect.For 2020,Qubec was a net buyer

234、of 11.4 Mt CO2e on the Qubec-California carbon market,which brought its net reductions to 26.6%.2 Qubecs ETS did its job and allowed us to exceed our mitigation goal of 20%below 1990 levels.These results also show that our fruitful collaboration with California is working as planned.When the economy

235、 slowed considerably,with a 5.3%GDP drop in 2020,the ETS held steady thanks to its featured minimum price for allowances which stopped unneeded allowances from being sold into the market and prevented the price from crashing.Two auctions in 2020 were undersubscribed due to the significant decrease i

236、n production and transportation during the pandemic.Unsold allowances were then removed from the market and are now gradually being put back as demand recovers.The demand for allowances has been strong since the economy started to recover,pushing up prices and reaching a historical price peak of CAD

237、 39.59(USD 30.95)at the May 2022 auction.Since its inception,all the revenues from the cap-and-trade system,close to CAD 7 billion (above USD 5.1 billion),have been dedicated to the climate fight in Qubec.The government has chosen to transfer all that money into the Qubecs Electrification and Climat

238、e Change Fund(FECC),which finances the measures outlined in the“2030 Plan for a Green Economy(PGE)”.Each year,the government announces new and updated measures under the PGE to help electrify our transport and buildings,encourage low-carbon strategies and innovation,increase energy efficiency,and he

239、lp society and the economy adapt to the impacts of climate change.While Qubec is resolutely working to make the necessary transition towards a green economy,it also acknowledges that the transition needs to be a just and equitable one.Even though revenues from the cap-and-trade system are not specif

240、ically allocated to that end,Qubec is counting on broader budgetary measures and its wide social safety net,one of the most generous in North America,to help workers resettle and acquire new skills if their livelihoods are threatened by the transition.In addition,the PGE provides CAD 23.8 million (U

241、SD 32.8 million)to track the labour markets needs and anticipate the required profes-sional,technical,and academic skills necessary to make the transition successful.To help Qubec residents,particularly the middle class and elderly,cope with high inflation,the government has also announced CAD 14 bi

242、llion(USD 19.3 billion)in new spending in 2022.Overall,though,Qubec believes that economic growth spurred by new technologies that help decarbonize the economy will far outweigh the negative impacts of job displacements,especially since Qubec is currently experiencing an acute labour shortage.2 Rapp

243、ort sur latteinte de la cible de rduction des missions de gaz effet de serre du Qubec pour lanne 2020(gouv.qc.ca)Claude Ct Climate Change Advisor,Ministre de lEnvironnement et de la Lutte contre les changements climatiques du QubecAllowance purchasesAllowance salesEstablishment of the Cap and Trade

244、System1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents21ICAP Status Report 2023QubecQubec was lucky enough to have been only marginally affected by the energy crisis that is still rocking European economies because it enjoys an enviable position when it comes to energy3

245、.Indeed,99.9%of Qubecs electricity comes from renewable,non-GHG-emitting sources,mainly hydro and wind power,and excess power is often exported to our neigh-bours.An overwhelming majority of Qubec households and businesses heat their homes and buildings with clean electricity and enjoy one of the lo

246、west prices in North America.The cap-and-trade system only covers a small fraction of the electricity consumed in Qubec,mainly that which may be imported from the United States in moments of peak demand.Even with such a high level of clean electricity,in all,50%of Qubecs overall energy consumption c

247、omes from renewables.The main impacts from increased energy prices were therefore felt in the transportation sector,which accounted for over 36%of Qubecs GHG emissions in 2019 and is the largest emitting sector in Qubec.In 2022,the government announced new rules on free allocation for eligible indus

248、trial emitters for the 2024-2030 period.These rules provide for a mechanism to consign a portion of the allowances resulting from the reduction in the level of free allocation.The revenues from auctioning of these allowances will be set aside on behalf of each emitter to finance projects related to

249、the climate transition.Businesses will need to use those funds to reduce GHG emissions,directly or through research and development projects.This innovative approach will incentivize them to increase their productivity and will serve as a lever for them to invest in reducing their GHG footprint.Qube

250、c sees the global energy crisis as an opportunity to urgently accelerate investments in the transition towards a low-carbon economy,especially if we are to collectively limit global rising temperatures to 1.5C and fulfil the promises of the Paris Agreement.3 At COP 25 in Madrid in 2021,Qubec became

251、a core member of the Beyond Oil and Gas Alliance after pledging to end oil and gas explora-tion and exploitation on its territory.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents22ICAP Status Report 2023QubecCHILETHE NEXT STEPS IN THE EVOLUTION OF CHILES CARBON PRICINGJ

252、uan Pedro SearleHead of Climate Change,Ministry of Energy of ChileChile is working on the necessary institutional arrangements to meet its climate objec-tives.In June 2022,the President enacted the“Framework Law on Climate Change”,the first climate change law in the country.The Law includes binding

253、commitments for both the government and the private sector and provides new market mechanisms to support the transition to carbon neutrality.The carbon tax is now undergoing a detailed review process,as part of a general fiscal reform,with the purpose of promoting mitigation in unregulated sectors a

254、nd increasing the tax rate to meet the commitments adopted in the Paris Agreement.Carbon taxSince 2017,Chile has had an operational carbon tax for stationary sources,which taxed emissions of CO2 and local pollutants from boilers and turbines equal or exceeding 50 MW of installed capacity.The carbon

255、tax has a flat rate of USD 5 per tonne of CO2,and the rate for local pollutants such as particulate matter,SO2 and NOx is calculated using specific local information related to the population affected by each facilitys industrial activ-ities,including the number of people affected and the social cos

256、t of emissions per capita.Electricity generation using biomass is exempt from the carbon tax but must pay the levy on local pollutants.To date,the tax has collected an annual average of USD 190 million that goes to the national treasury as part of the general budget.Two modifications to the tax came

257、 into force in February 2023.The first is related to the installed capacity threshold,which was replaced for one of CO2 emissions(25,000 tonnes)and particulate matter(100 tonnes).If either of these two thresholds is equaled or exceeded,the regulated source must pay for the total emissions of the pol

258、lutants concerned.The other modification introduced an offsetting system whose reductions will come from sources not regulated by the tax;this carbon credits system has the aim of promoting mitigation in other sectors as well as the establishment of a domestic market for offsets.Possible changes to

259、the tax rateAs there seems to be a consensus that the price of the carbon tax is low,official guidance has been given recently as to where its value should go.For example,the updated National Energy Policy indicates that it should reach USD 35/tCO2 by 2030 and increase to USD 80/t by 2040.The new go

260、vernment has proposed a review of the current tax as part of its fiscal reforms,with the goal of raising it to at least USD 40.Although no date is indicated for this increase,the process has begun.Among its objectives,the review will assess possible increases in the tax rate and identify measures to

261、 correct for distortions that the tax has entailed to date,for example,the fact that the carbon tax is not charged at the marginal cost in the case of the electricity sector.Although it is not possible to anticipate the results of this internal process led by the Ministry of Finance,stakeholders hav

262、e so far shown a remarkable interest in the matter.Market instruments under the new Framework Law on Climate ChangeThe“Framework Law on Climate Change”establishes a 2050 carbon neutrality goal for the country and a series of policy instruments to support this objective.Among them,it estab-lishes a s

263、ystem of greenhouse gas emission caps that could be applied to individual sources,groups of sources,or sectors.Similar to a baseline-and-credit system,each regulated entity will have to keep their emissions within a limit,and if they reduce beyond their baseline,they will be able to trade their surp

264、lus on a domestic market set up for this purpose.These same entities may also use offsets from other non-regulated domestic entities,including offsets generated under Article 6 of the Paris Agreement.In order to implement the system,the Ministry of Environment should have a regulation in place by Ju

265、ne 2023.In addition to these specific instruments,the Law further empowers the responsible minis-tries to use economic instruments,which may be financial,fiscal,or market-based,to address the negative externalities of GHG emissions.Work ahead in the energy sectorUnder Article 37 of the Law,and with

266、the support of the World Banks Partnership for Market Implementation(PMI),the Ministry of Energy will this year begin to evaluate the technical and economic relevance of a cap-and-trade system for the energy sector.The aim is to develop and implement a cap-and-trade pilot for the sector,which could

267、evolve into a more binding mechanism and support a cost-effective transition to carbon neutrality.The PMI will also assist the government in defining and implementing the baseline and credit system under the Law,including the associated infrastructure,such as the registries and MRV systems.The energ

268、y sectors GHG emissions are close to 80%of national emissions.At the same time,it is where the main mitigation measures are coming from.In order to fully meet national and international goals and commitments,the energy sector will require cost-effective instruments to achieve and even advance these

269、goals.Among them,we envision that an ETS can contribute to these objectives and,moreover,can open the door to linking with other similar markets,especially in the Americas.We look forward to advancing the design and implementation of such a system.1 Practitioner Insights2 Infographics3 Factsheets4 A

270、bout ICAPTable of Contents23ICAP Status Report 2023ChileNEW ZEALANDNEW ZEALAND ETS IN REVIEWFreeya Farrar&Kyla van Heerden Ministry for the Environment,New ZealandSince its establishment in 2008,the New Zealand Emissions Trading Scheme(NZ ETS)has been the primary tool enabling New Zealand to meet in

271、ternational and domestic climate change obligations and targets.The NZ ETS requires all sectors,except agriculture,to pay for their emissions through obligations to surrender a commensurate amount of so-called New Zealand Units(NZUs).In 2021,auctioning of units commenced,following a package of refor

272、ms to the NZ ETS.NZUs are also given freely to firms carrying out activ-ities that are emissions intensive and trade exposed to address the risk of emissions leakage,and for emissions removals through forestry and exports of emitting products from New Zealand.In the past year,New Zealand has publish

273、ed its first Emissions Reduction Plan,which sets the country on course to achieve its 2050 net-zero target.1 Emissions pricing through the NZ ETS is a key part of this plan.Through a strong and stable price signal,emissions pricing supports a low-carbon transition by providing a clear,consistent,eco

274、nomy-wide signal of the cost of emissions,and the relative benefit of lower-emissions choices or investing in removals like forestry.Emissions pricing plays a central role in reducing New Zealands gross and net emissions.Still,by itself it is not sufficient to motivate action at the scale and urgenc

275、y required to meet New Zealands climate goals.Instead,a mix of regulation and supporting policies will help unlock new ideas,businesses,and markets that would have been uneconomic at lower emissions prices,thereby driving more climate action at a lower overall cost to the economy.Furthermore,the rev

276、enue generated by NZU auctions is used to support immediate and future emissions reductions through the Climate Emergency Response Fund,established in 2022.1 The“Zero Carbon Act 2019”mandates that all greenhouse gases,other than biogenic methane,should reach net zero by 2050 and these should be a mi

277、nimum 10%reduction in biogenic methane emissions by 2030,and a 24-47%reduction by 2050(compared with 2017 levels).While upstream emitters are responsible for sourcing and surrendering emissions units,the cost can be passed through to businesses and households.Overall,the impact on house-holds from a

278、n increased emissions price is estimated to be moderate because New Zealand households typically spend only a small proportion of their budgets on emissions-intensive goods such as petrol.However,the lowest-income households could face a greater impact because they spend a larger share of their inco

279、me on such goods,while also having fewer options to invest in alternatives.The policies within the emissions reduction plan,and subsequent plans(to be published every five years from 2025),are intended to reduce New Zealands reliance on the carbon-intensive fuel sources covered by the NZ ETS.The dis

280、tributional impacts the NZ ETS has on communities is an important issue,especially given the recent spikes in energy prices,mainly experienced in New Zealand through rising liquid fossil fuel prices.It is worth noting that New Zealand has a high proportion of renewable electricity sources,so it has

281、not experienced the same dramatic electricity price increases as other economies that are more reliant on fossil fuels.But because the NZ ETS puts a price on all emissions from transport and energy,it has a more direct impact on peoples daily lives compared to other such systems that cover only elec

282、tricity and indus-trial processes.Even so,the NZ ETS is not the primary cause of the recent increases in fuel and energy prices that have impacted New Zealands vulnerable communities the most.However,distributional impacts from the NZ ETS may become more severe in the future if the NZU price were to

283、 increase rapidly.The NZ ETS is designed with price control measures that are intended to prevent prices from reaching a level considered unacceptable.Each year,the government updates key price control settings,such as the cost containment reserve trigger price,which is designed to moderate high pri

284、ces.And while it is essential to consider inflation and the impact of emissions prices on households and the economy when updating price control settings,these measures are not designed to address distributional impacts directly.For this,more targeted policies are required,to make sure that the appr

285、opriate support goes to those that need it.As the emissions price rises in line with our increasing climate ambition,targeted policies are needed to support vulnerable communities and ensure an equitable transition.This includes targeted support for Mori communities(New Zealands indigenous peoples)w

286、hich typically have higher representation in lower-income households and may need tailored help to adapt to the increasing price of emissions.Actions within the first emissions reduction plan,including New Zealands Equitable Transitions Strategy and associated complementary measures to address futur

287、e distributional impacts of potentially higher carbon prices,are currently being developed.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents24ICAP Status Report 2023New ZealandThe emissions reduction plan contains the policies needed to raise the ability of the NZ ETS to

288、 motivate action at the scale and urgency required to meet New Zealands climate goals.Other policies such as those in the emissions reduction plan can incentivize innovation and thereby drive more climate action at a lower overall cost to the economy.Alongside economy-wide emissions pricing and othe

289、r abatement policies,the plan includes actions to ensure a fair,equitable,and inclusive transition.The plan proposes a range of interven-tions to manage the immediate effects of the transition,such as subsidies for public transport and improved support for workers who need to change jobs as the econ

290、omy transitions.The government is also helping industries and communities prepare for change;this includes Industry Transformation Plans across eight sectors and reform of the Vocational Education system to ensure New Zealanders have the education and skills relevant to work today and in the future.

291、Globally there is a lot of work to be done to turn the tide on climate change.New Zealand has a strong framework with the NZ ETS and complementary policies,such as those contained within the emissions reduction plan.Complementary policy work will help ensure that all New Zealanders are brought along

292、 on the countrys transition to a low-emis-sions,climate-resilient economy.As the emissions price rises in line with our increasing climate ambition,targeted policies are needed to ensure an equitable transition.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents25ICAP Stat

293、us Report 2023New ZealandINFOGRAPHICS02FROM LOCAL TO SUPRANATIONAL 27EMISSIONS TRADING WORLDWIDE 29GLOBAL EXPANSION OF ETS 30SECTOR COVERAGE 31DIFFERENT SHAPES OF ETS 32ALLOWANCE PRICES AND REVENUES 34CONSUMER,ENERGY AND ALLOWANCE PRICES IN 2021 AND 2022 36PRICES OF COVERED EMISSIONS 37ETS IN PERSPE

294、CTIVE 381 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents26ICAP Status Report 2023FROM LOCAL TO SUPRANATIONALEMISSIONS TRADING SYSTEMS OPERATE AT EVERY LEVEL OF GOVERNMENTThis infographic demonstrates the diversity and complexity that exists with respect to the level of

295、government at which emissions trading can be implemented.At one end of the spectrum,city-level ETSs are in operation,for example,in Shenzhen and Tokyo.At the other end,the EU ETS operates supranationally in all EU Member States plus Iceland,Liechtenstein,and Norway.Multiple ETSs may be in force in c

296、ountries like Germany and Austria,where some emissions are covered by the EU ETS and others by the German or the Austrian National ETS.Similarly,the China National ETS currently covers power sector emissions while other province-and city-level ETS pilots regulate emissions from a variety of sectors.

297、In North America,many provincial or state-level ETSs exist,with some linked domestically or internationally.In the rest of ICAP Status Report 2023 you can find a wealth of information about these individual systems that are already in force as well as many others that are under development or consid

298、-eration.1 SupranationalEU Member States +Iceland +Liechtenstein +Norway10 CountriesAustria China Germany Kazakhstan Mexico Montenegro New Zealand Republic of Korea Switzerland United Kingdom20 Provinces&StatesCalifornia Connecticut Delaware Fujian Guangdong Hubei Maine Maryland Massachusetts New Ha

299、mpshire New Jersey New York Nova Scotia Oregon Qubec Rhode Island Saitama Prefecture Vermont Virginia Washington6 CitiesBeijing*Chongqing*Shanghai*Shenzhen Tianjin*Tokyo*Beijing,Chongqing,Shanghai and Tianjin are provincial-level municipalities in the Chinese administrative system.1 Practitioner Ins

300、ights2 Infographics3 Factsheets4 About ICAPTable of Contents27ICAP Status Report 2023From Local to Supranational13ALMOST 1/3 OF THE GLOBAL POPULATION LIVES UNDER AN ETS IN FORCE55%JURISDICTIONS MAKING UP OF GLOBAL GDP ARE USING EMISSIONS TRADINGOF GLOBAL GHG EMISSIONS ARE COVERED BY AN ETS17%1 Pract

301、itioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents28ICAP Status Report 2023From Local to SupranationalCalifornia Cap-and-Trade ProgramEMISSIONS TRADING WORLDWIDETHE CURRENT STATE OF PLAY IN CAP-AND-TRADE The ICAP ETS world map depicts emissions trading systems currently in force

302、,under development or under consideration.As of January 2023,there are 28 ETSs in force.Another eight are under development and expected to be in operation in the next few years.These include ETSs in Colombia,Indonesia,and Vietnam.Twelve jurisdictions are also considering the role an ETS can play in

303、 their climate change policy mix,including the first African jurisdiction depicted in the map:Nigeria.If a jurisdiction has multiple systems in force,it is depicted in blue,with the borders of the jurisdiction representing the layered systems(e.g.Germany and Guangdong).If,however,it has a system in

304、force but is also developing an additional system,it is depicted in blue but also features a green border(e.g.the EU).In force(28)Under development(8)Under consideration(12)Mexican ETS Oregon Climate Protection ProgramWashington Cap-and-InvestRegional Greenhouse Gas Initiative(RGGI)Connecticut Delaw

305、are Maine Maryland Massachusetts New Hampshire New Jersey New York Rhode Island Vermont VirginiaMassachusetts Limits on Emissions from Electricity GenerationNew York CityNew York StateNorth CarolinaQubecCap-and-Trade SystemNova ScotiaCap-and-Trade ProgramBrazilChileNigeriaColombiaUK ETSGerman Nation

306、al ETSUkraineEU ETS 2TrkiyeKazakhstan ETSMontenegro ETSSwitzerland ETS Beijing Chongqing Fujian Guangdong Hubei Shanghai Shenzhen TianjinChinese PilotsIndonesiaThailandIndiaVietnamMalaysiaTaiwan(China)PakistanRepublic of Korea ETSJapanSakhalin(Russia)Tokyo Cap-and-Trade ProgramSaitama ETSNew Zealand

307、 ETSChina National ETSPennsylvania EU Member States Iceland Liechtenstein NorwayEU ETSAustrian National ETS1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents29ICAP Status Report 2023Emissions Trading WorldwideGLOBAL EXPANSION OF ETSTHE SHARE OF GLOBAL GHG EMISSIONS UNDER

308、AN ETS TRIPLED SINCE 20052006200720122009+RGGI*2008+New Zealand2005+EU ETS2013+Switzerland+California+Qubec+Kazakhstan+Chinese Pilots*2010+Tokyo2011+Saitama20182014+Chongqing+Hubei(as new Chinese Pilots)2016+Fujian(as a new Chinese Pilot)2015+Republic of Korea2017+Ontario2020+Mexico2021+China Nation

309、al ETS*+Germany+UK*2022+Oregon2019 Ontario +China National ETS+Nova Scotia 2023+Austria+Montenegro+Washington5%of global GHG emissions17%of global GHG emissions*Beijing,Guangdong,Shanghai,Shenzhen,Tianjin*RGGI includes New Jersey(as of 2020)and Virginia(as of 2021).*The Chinese National ETS came int

310、o force in 2021 but has retroactive compliance obligations in 2019 and 2020,indicated above by the striped bar*In 2021,the UK launched its own ETS which required an adjustment in the EU ETS cap.The graphic depicts the worldwide growth of emissions trading over time.2023 has seen the start of new sys

311、tems in Austria,Montenegro and Washington.The share of global GHG emissions covered by emissions trading is over 17%,more than triple the amount than when the EU ETS was launched in 2005.Changes over time are driven by the addition of new sectors and systems,as well as by the counteracting trends of

312、 declining caps in many systems and growing global emissions.See“Notes on Methods and Sources”for further details.3,0006,0009,000MtCO2e1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents30ICAP Status Report 2023Global Expansion of ETSSECTOR COVERAGESECTORS COVERED BY EMISS

313、IONS TRADING ACROSS SYSTEMSindicates which sector is covered upstreamBeijing,Chongqing,Fujian,Guangdong,Hubei,Shanghai,Shenzhen,TianjinFujian,Guangdong,ShanghaiBeijing,Shanghai,ShenzhenBeijing,ShanghaiThe Fujian ETS covers the electricity gridABCDECALIFORNIA C&TCHINA NATIONAL ETSCHINESE PILOTSEU ETS

314、GERMAN NATIONAL ETSKAZAKHSTAN ETSMEXICAN ETSMONTENEGRO ETSMASSACHUSETTS LIMITS ON EMISSIONS75%44%39%38%38%14%12%37%26%70%47%8%40%49%87%45%77%74%Emission coverage AUSTRIAN NATIONAL ETSNEW ZEALAND ETSNOVA SCOTIA C&TOREGON CPPQUBEC C&TREPUBLIC OF KOREA ETSRGGISWITZERLAND ETSTOKYO C&T&SAITAMA ETSUNITED

315、KINGDOM ETSWASHINGTON C&IABThe graphic shows sectors(types of economic activity)covered by an ETS in force in 2023.Systems are listed clockwise alpha-betically,with the numbers in the outermost ring indicating the share of aggregate emissions covered by the system as per the most recent available da

316、ta.Upstream coverage in a sector is indicated with an arrow.Sectors are considered covered when at least some entities in the sector have explicit compliance obligations.Typically,not all facilities in the sector are regulated because of limits like inclusion thresholds.In addition,not all gases or

317、processes of a given sector may be covered.The jurisdic-tions respective factsheets provide more information on system coverage.The graphic includes only sectors which are covered by at least one ETS.See“Notes on Methods and Sources”for further details.Agriculture ForestryWasteDomestic AviationTrans

318、portBuildingsIndustryPowerCDE1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTable of Contents31ICAP Status Report 2023Sector CoverageICAP Status Report 2023Different Shapes of ETSDIFFERENT SHAPES OF ETSA COMPARATIVE LOOK AT KEY METRICS IN SELECTED SYSTEMSEach of the graphs below presen

319、ts a different metric across ETSs in force.Coverage shows the share of the jurisdictions GHG emissions covered under the ETS.Allowance price is measured in USD per metric tonne of CO2e and averaged over 2022.Auction share,expressed as a share of the 2022 cap,denotes the share of allowances that were

320、 auctioned and generated revenues for the jurisdictions government.Offset use indicates the share of a compliance entitys obligations that can be met using approved offsets.See“Notes on Methods and Sources”for further details.Coverage0-100%Allowance pricein USDEU ETS 38%SWITZERLAND ETS 12%KAZAKHSTAN

321、 ETS 47%CALIFORNIA C&T 75%QUBEC C&T 77%RGGI 14%MASSACHUSETTS ETS 8%NOVA SCOTIA C&T 87%NEW ZEALAND ETS 49%17%TOKYO C&T20%SAITAMA ETS44%CHINA ETS40%MEXICO ETS38%GERMANY ETS26%UK ETS45%OREGON CPPNA AUSTRIA ETS70%WASHINGTON C&IEU ETS$83SWITZERLAND ETS$81KAZAKHSTAN ETS$1CALIFORNIA C&T$28QUBEC C&T$28RGGI$

322、13NOVA SCOTIA C&T$27NEW ZEALAND ETS$48REPUBLIC OF KOREA ETS$18$5 TOKYO C&T$1 SAITAMA ETS$8 CHINA ETS$0 MEXICO ETS$32 GERMANY ETS$93 UK ETSNA OREGON CPP$32 AUSTRIA ETSNA WASHINGTON C&IMASSACHUSETTS ETS$8REPUBLIC OF KOREA ETS 74%32CoveragePercentage of jurisdictions emissions covered under the system(

323、in%).Allowance priceThe weighted average price for allowances across 2022,for one metric tonne of CO2e emissions(in USD).Auction shareProportion of allowances that is not allocated for free,but must be acquired either at auction or otherwise(in%).Offset useShare of compliance obligation that can be

324、met using approved offsets.Offset use0-20%Auction share0-100%EU ETS 57%SWITZERLAND 13%KAZAKHSTAN ETS NACALIFORNIA C&T 38%QUBEC C&T 59%RGGI 93%MASSACHUSETTS ETS 100%NOVA SCOTIA C&T 18%NEW ZEALAND ETS 56%REPUBLIC OF KOREA ETS 4%NA TOKYO C&TNA SAITAMA ETS0%CHINA ETS0%MEXICO ETS100%GERMANY ETS54%UK ETS0

325、%OREGON CPP100%AUSTRIA ETSNA WASHINGTON C&IEU ETS 0%SWITZERLAND ETS 0%KAZAKHSTAN ETS*100%CALIFORNIA C&T 4%QUBEC C&T 8%RGGI 3.3%MASSACHUSETTS ETS 0%NOVA SCOTIA C&T NANEW ZEALAND ETS 0%REPUBLIC OF KOREA ETS 5%NA TOKYO C&TNA SAITAMA ETS5%CHINA ETS10%MEXICO ETS0%GERMANY ETS0%UK ETS10%OREGON CPP0%AUSTRIA

326、 ETS8%WASHINGTON C&I*Up to 5%from projects not located on federally recognized tribal land,plus an additional 3%from projects located on federally recognized tribal land*The Kazakhstan ETS is represented out of scale in this infographic.1 Practitioner Insights2 Infographics3 Factsheets4 About ICAPTa

327、ble of Contents33ICAP Status Report 2023Different Shapes of ETSICAP Status Report 2023Allowance Prices and RevenuesALLOWANCE PRICES AND REVENUES2022 IN A LONGER HISTORICAL CONTEXTEU ETSUK*Republic of KoreaNew ZealandChinaGermany*RGGI*Chinese PilotsNova Scotia*California/Qubec*USD200406080

328、00000212022Jan 22Feb 22Nov 22Dec 22Mar 22Apr 22May 22 June 22 July 22 Aug 22 Sept 22 Oct 22The upper panels of this infographic use data from the ICAP Allowance Price Explorer to visualize developments in allowance markets in a long historical context sinc

329、e 2008(left panel)and in 2022(right panel).Both the short-and long-term price developments are driven by changes in current and expected future scarcity of allowances,due to variations in general economic conditions,revisions to the rules of the systems(including those governing offsets and market s

330、tability mechanisms),and interactions with other climate and energy policies.The shaded areas indicate the range of prices observed in the Chinese pilot ETSs.The panel on the next page displays information on revenues raised by governments at auctions of allowances over time.The amount of revenue co

331、llected depends on the jurisdictions size,ETS coverage,share of auctioned allowances and allowance prices.Over time,increases in allowance prices and the introduction of new systems has led to an increase in revenues raised from the auction of allowances.In all panels,observations in non-USD currenc

332、ies are converted to USD using exchange rate data from the IMF.See“Notes on Methods and Sources”for further details.*Primary market dataYEARLY REVENUES RAISED BY EACH SYSTEM010,00020,00030,00070,000Yearly total in million USD60,00050,00040,00020018+Massachusetts2019+Republi

333、c of Korea2020+Nova Scotia 2021+Germany I+UK20008RGGI2011+New Zealand2012+California I+EU ETS2013+Qubec I+Chinese Pilots2014+SwitzerlandAustria(USD 263 million)RGGI(USD 1,194 million)UK(USD 7,561 million)Germany(USD 6,743 million)Chinese Pilots,Massachusetts,Nova Scotia and Switzerland(USD 205.8 million)Republic of Korea(USD 245.4 million)Qubec(USD 1,028 million)New Zealand(USD 1,288 mi