Question

To ask the Secretary of State for Energy and Climate Change, when she expects a fully functioning carbon market to be operational.

The EU has an effective carbon market in the form of the EU Emissions Trading System (EU ETS), though an oversupply of allowances in the system means it is not delivering the degree of low carbon investment it should. The Government worked hard with European partners to secure agreement to the EU ETS Market Stability Reserve to address this, and welcomes the Commission’s recent proposals for further reform of EU ETS from 2021.

While a single global carbon market is unrealistic in the foreseeable future, over forty countries and sub-national jurisdictions, covering around 12% of global emissions, are implementing carbon pricing policies. The Government is supporting linking between these bottom-up initiatives by developing an international framework through the UNFCCC, through political engagement, for example the G7, and International Climate Fund projects. Over time these linked schemes should converge towards a single global market.