Dear ,

The postponement of COP26 in Glasgow to November 2021 risks setting back international negotiations and creating a vacuum for dialogue on vital areas of climate policy, including carbon pricing. Against this backdrop, ICAP is partnering with the International Emissions Trading Association (IETA) to provide a space for stakeholders to engage, network, and share knowledge through a Virtual Carbon Market Pavilion on 11-12 November 2020. Fortunately, we’ve gained a lot of practical experience in organizing virtual workshops and other events in recent months, with no shortage of opportunities in the months ahead. We detail some of those events and the Virtual Carbon Market Pavilion below.     

As always, we are pleased to share the ICAP newsletter with you, a quarterly summary of the latest developments in emissions trading around the world and an update on ICAP activities.

All the best,

In this issue:

Upcoming Events

• ICAP-IETA Virtual Carbon Market Pavilion
• ICAP-IETA event on resilient carbon market design at NYC Climate Week
• ICAP Annual Meeting

News from ICAP

• Mexico ETS Academy
• Colombia ETS Academy
• ETS Map Update

ETSs around the world

• Chinese regional pilots continue operation while plans for national ETS are refined
• Virginia finalizes ETS regulations and officially joins RGGI
• Nova Scotia holds first cap-and-trade auction
• Latest carbon prices from ETSs around the world

Upcoming Events

ICAP-IETA Virtual Carbon Market Pavilion

While central to any COP are negotiations between parties, pavilions and side events serve as an important platform for organizations and stakeholders to engage, share knowledge, build capacity, network, and explore policy options. ICAP and IETA want to replicate this important aspect of COP26 through a virtual platform that facilitates exchange between experts, policy makers, and negotiators across regions. Held on 11-12 November 2020, the ICAP-IETA Virtual Carbon Market Pavilion will feature a program of high-level discussions, side events, and interactive sessions, along with an informal carbon markets networking arena for people to connect and stay in touch. 

A detailed program with registration details will be shared shortly, but there is still time to partner with us by organizing a session. Please send an expression of interest detailing your concept for a session to Lisa Spafford (spafford@ieta.org) and the ICAP Secretariat (secretariat@icapcarbonaction.com), ideally by Friday 18 September.    

ICAP-IETA event on resilient carbon market design at NYC Climate Week 

Earlier this year, we saw shocks to world economies due to COVID-19. Like other markets, the existing ETSs were not immune to impacts of these economic shocks. However, although they have different design features, data shows they saw rational market behavior and a return to long-term market fundamentals in a short amount of time.  As part of New York City Climate Week, ICAP is partnering with IETA to host the high-level event “Ambitious and resilient carbon markets: a central pillar for green recovery” on 24 September 2020 from 11:15-13:00 EDT. This session will allow for administrators of different carbon markets as well as global business leaders to provide their insights into performance of major carbon markets throughout the ongoing crisis.

For more information on the agenda, speakers, and registration, see here. 

ICAP Annual Meeting

Every year ICAP holds an annual meeting bringing together our 36 members and observers to discuss the latest policy developments in their jurisdictions, get updates about the latest ICAP activities, and guide our work program going forward. Given the challenges of international travel amid the COVID-19 crisis, we will hold our annual meeting virtually for the first time since we were founded in 2007. To accommodate the many different time zones of our jurisdictions, we will hold two separate days of meetings 27-28 October 2020, both days operating at different times to allow for participation across the Americas, Europe, and Asia-Pacific. We’re looking forward to testing out this new format and embracing the challenges it presents to maintain the same level of engagement and discussion as in years past.

News from ICAP 

Mexico ETS Academy

Emissions Trading Systems (ETS) around the World

Chinese regional pilots continue operation while plans for national ETS are refined

The eight Chinese regional ETS pilots have continued their operation and policy modifications in 2020, with little price impact from the COVID-19 crisis. Meanwhile, national authorities are continuing preparations for the Chinese national ETS, most recently updating the draft allocation plan for the power sector.

This news update provides the latest developments in the regional ETS pilots in the areas of compliance, auctioning, prices and trading, allocation plans, and policy modifications. Most pilots have pushed back the 2019 compliance deadline because of COVID-19 but continue to hold auctions. Trading on the secondary market is down significantly compared to the first half of 2019, but the weighted average price across all pilots is 18% higher than the same period last year, proving resilient to any COVID-19 slump.

Typically, annual allocation plans are released within, rather than before, the start of a compliance period, and most pilots have announced their 2019 allocation plans. Many have also pursued policy modifications, including Beijing, which continues to increase the stringency of its benchmark values for the power sector and is shifting from historical emissions based free allocation to benchmarks for the heat and cement sectors.    

Read more here…

Virginia finalizes ETS regulations and officially joins RGGI

On 8 July 2020, the Regional Greenhouse Gas Initiative (RGGI) formally welcomed Virginia as the newest participating state in the mandatory cap-and-trade program covering the power sector starting 2021. Virginia’s inclusion in the group of linked ETSs increases the regional emissions cap coverage by almost 30%.

Virginia’s regulation was originally finalized in April 2019, but implementation was suspended following a legislative maneuver from opponents of the program. Legislation passed under a new legislative majority this year and allowed the process to continue but required some changes to the regulation, which has now been finalized.

Read more here…

Nova Scotia holds first cap-and-trade auction

On 10 June 2020, Nova Scotia held its first auction under its cap-and-trade system, selling all allowances on offer.

The province’s environment ministry offered 640,000 allowances at a floor price of CAD 20 per ton (USD 14.78). Fifteen out of 26 regulated entities qualified for the June 2020 auction, which settled 20% above the floor price at CAD 24 (USD 17.74) with bidding volume of about one million allowances. Regulated entities qualify for the auctions by meeting certain requirements, such as registering in the Compliance Instrument Tracking System Service (CITSS) and submitting a financial guarantee. Opt-in emitters or speculators are not allowed to participate in auctions.

Read more here...

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