“It`s hard to imagine how countries will agree on the right options and the right accounting rules and methods, when we can`t even have an agreement to eliminate those that are clearly incompatible… I mean, it`s not even a climate atmosphere, in many cases it`s common sense. An emissions trading system – sometimes called a cap-and-trade system – limits the overall level of greenhouse gas emissions and allows low-emission industries to sell their additional allowances to larger emitters. By creating the supply and demand for emission allowances, a ETS sets a market price for greenhouse gas emissions. The cap helps ensure that the necessary emission reductions are made in order to keep emitters (in total) within their pre-allocated carbon budget. Another of the most controversial issues for the negotiations is whether the Kyoto-era projects should be incorporated into the Article 6.4 trading system, as well as the methods that govern how they calculate their CO2 savings and the carbon loan “units” they have already generated. Starting in 2021, Germany has published a carbon pricing mechanism for fuels in the construction and transport sectors. This controversial and potentially ambiguous language is then fixed in Article 6.5. That all emission reductions resulting from the new Emissions Trading Mechanism take all measures: in its efforts to take action within the framework of everyone`s climate policy, ICC – on behalf of 45 million companies in more than 100 countries – calls on contracting parties to draw conclusions on the effective and transparent implementation of Article 6 in the COP25 climate negotiations in December 2019 on one point from the other This will help to meet our ambitious climate targets and ensure a sustainable and inclusive low-carbon future. To meet the climate targets, Germany has published its 2030 climate change programme. The programme provides for a carbon pricing mechanism in the form of a national ETS for fuels used in the construction and transport sectors from 2021.
The long-term objective is to integrate these sectors into the EU ETS, which already covers greenhouse gas emissions from German aviation, energy, industry and aviation. The conflict between these nations and the parties concerned with maintaining the “environmental integrity” of global carbon markets is causing much of the continued delay in procedures. The question would arise if a host country sold Article 6 emission credits, which were created in an area “outside the scope” of its NDCs, instead of falling “inside” the commitment. A report by the Organisation for Economic Co-operation and Development (OECD) has given up on the idea that 70% of energy-related CO2 emissions from industrialized and emerging countries are completely untaxed, making little incentive to move towards cleaner energy. The report “Taxing Energy Use 2019” shows that taxes on polluting fuels are too low and need to be adjusted, which, combined with government subsidies and investments, could encourage a transfer to energy, transport, industry and low-carbon agriculture. To achieve the goals of the Paris Agreement and limit the increase in global temperature to 1.5 degrees Celsius over the course of this century, the global economy must evolve rapidly. A carbon price is needed to incorporate the cost of climate change into economic decision-making, in order to significantly reduce U.S. greenhouse gas emissions, particularly in the electricity sector.
However, a carbon price is not a miracle weapon in the fight against climate change.