1 Introduction
1. An emissions trading (or cap-and-trade) system
is a market mechanism that aims to reduce greenhouse gas emissions.
Increasing numbers of emissions trading systems are being established
around the world. There is currently no likelihood of establishing
a global emissions trading system in the near future. The concept
of a total safe level of global emissions was introduced by the
Intergovernmental Panel on Climate Change's (IPCC) Fifth Assessment
Report in 2013 which highlighted the desirability of working towards
this goal in the long term. In recent years there has been a shift
in focus from a "top-down" approach to international
emissions trading to a more "bottom-up" regional, national
or subnational approach. This means that disparate emissions trading
systems would in the future need to be "linked" in order
to facilitate the development of a global market.
2. In this report we review the rise of emissions
trading systems around the world. We explore the benefits of linking
emissions trading systems. We then assess the EU ETS, as an important
market in which the UK participates. Finally we discuss the importance
of a new global climate agreement.
3. The terms of reference for the inquiry can be
found online.[1] We held
four public hearings, with academics, business groups and the
Parliamentary Under-Secretary of State, and received a range of
written evidence which is published on our website. A full list
of witnesses can be found at the end of this report. As part of
our investigation we also visited Beijing, Wuhan and Guangdong
in China to see first-hand the progress the Chinese are making
in establishing a national emissions trading system. An outline
of the visit, along with visit notes can be found in the Annex.
We are extremely grateful to all those who gave evidence to this
inquiry and especially for all those who gave us their time during
our visit to China.
1 Energy and Climate Change Committee, Call for evidence on Linking Emissions Trading Systems
(March 2014) Back
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