Emissions Trading Worldwide: ICAP Status Report 2021

ICAP’s “Emissions Trading Worldwide: Status Report 2021” shows significant growth in the coverage of emissions trading systems (ETSs) with the launch of the China National ETS and a strong response to COVID-19 among systems in force across the globe.

This year carbon markets passed a resilience test, as they proved largely durable to the economic impacts of COVID-19. Although the pandemic led to initial price drops, prices on average significantly exceeded their pre-pandemic levels by the end of 2020. This market resilience can be attributed in part to two key factors: market stability measures that are now widely in place across systems and future expectations of more stringent conditions as governments pursue more ambitious targets.  Despite the pandemic, ETS coverage continues to expand globally and gain a more significant role in climate policy as governments increasingly announce net-zero targets.

Global emissions covered by an ETS nearly doubled in 2021, from 9% to 16%, as the number of systems in force grew from 21 to 24 with the launch of China’s national ETS as well as the German National and UK ETSs.  Another 22 governments spanning Asia-Pacific to Europe are considering or actively developing an ETS, as work continues among individual US states and through the regional Transportation and Climate Initiative Program, Colombia completes technical work to launch a pilot system in 2023 or 2024, and Indonesia and Vietnam lay the legal and regulatory groundwork to launch systems in the future. Overall, one-third of the global population now lives under an ETS in force. 

ETSs’ demonstrated resiliency has contributed to building trust in their ability to achieve cost-effective mitigation, while also maintaining economic competitiveness and fostering low-carbon investment. Policymakers around the world are looking to further develop and expand their systems as they work towards meeting increasing levels of ambition. Depending on jurisdictional priorities, advancing climate action can also be further supported by the revenues generated through ETS allowance auctions. Since 2009, ETSs have generated USD 103 billion in revenue, offering ample support for climate programs on energy efficiency, low-carbon transport, and renewable energy, as well as assisting low-income or socially disadvantaged groups.    

The 2021 edition of the ICAP Status Report provides a comprehensive snapshot of the latest developments in emissions trading around the world. Articles from policymakers and government advisors present insights on the newly launched Chinese national ETS and UK ETS as well as system reviews and reforms in the EU ETS, the Regional Greenhouse Gas Initiative (RGGI), New Zealand, and the Republic of Korea. What’s more, detailed information on all ETSs is provided through in-depth factsheets alongside infographics that highlight key figures and trends.

To view and download the full report please click here. Also available is a standalone version of the report’s infographics and practitioner insights, a Spanish executive summary, a French executive summary and a Chinese executive summary.

The ICAP Secretariat also hosted two webinars with policymakers to highlight takeaways from the report and the latest developments in their respective systems. They were held on the 24 March at 16:00 Central European Time and 31 March at 11:00 Central European Time and covered developments in the Americas and Europe as well as in Asia and Europe.

Finally, ICAP Head of Secretariat William Acworth recorded a Resources Radio podcast, a weekly podcast from Resources for the Future, on the 2021 ICAP Status Report.