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Linked Carbon Markets: Silver Bullet, or Castle in the Air?

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Does the Paris Agreement provide a boost to carbon markets? Although carbon markets are spreading globally, so far relatively few links have been established between them. The history of linking indicates that successful efforts are characterized by converging ETS design, and, related to this, political will. Moreover, existing links have been facilitated by prior economic and political ties. Such linking processes face significant challenges related to distribution of power and political feasibility. The Paris Agreement does not make the more intrinsic challenges of political linking go away. Moreover, a significant amount of elaboration and clarification of the Paris Agreement remains subject to further negotiations. Nevertheless, Paris confirmed an increasing support for carbon markets: the periodic reviews of state climate policies, shared fulfilment, and common guidance for accounting, together provide a new momentum for the development of carbon markets and the process of linking them. What this boost means for the prospects of a globally interlinked carbon market remains to be seen.

Affiliations: 1: Fridtjof Nansen Institute, tj@fni.no; 2: Fridtjof Nansen Institute, jorgen.wettestad@fni.no

10.1163/18786561-00601010
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/content/journals/10.1163/18786561-00601010
2016-05-06
2017-10-20

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