Compliance carbon markets are demanding in terms of the governance and the political support they require, and significant differences exist in their design. Many countries have not yet been able to embark in such compliance markets but are relying on the creation of carbon credits to get started, as others have been successfully doing in the past. Voluntary carbon markets can be effective provided high environmental integrity is secured, but unfortunately this has not always been the case. Several initiatives are currently being undertaken by private operators as well as public authorities to eliminate the so-called greenwashing and to make carbon credits and the markets on which they are exchanged a worthwhile tool of climate action.
The Hub will run a work programme bringing together compliance and voluntary carbon markets at a global level. The aim is to explore and develop the potential interoperability of the carbon pricing systems such as emissions trading systems (ETS), carbon taxes, Voluntary Carbon Markets (VCM), Article 6 exchanges. The hub would bring together policy-relevant expertise at global level. In Florence particular insights are drawn from in-depth expertise on EU ETS and the related Carbon Boarder Adjustment Mechanism (CBAM). In addition, related questions will be developed such as on incentives for greening industry as well as making the financial system more sustainable.
The programme will explore supply and demand-side related topics such as: i) issues related to the verification of carbon credits and the development of registries, ii) establishing comparable removal and reduction issuances in ETS allowances and VCM credits, iii) comparing and evaluating MRV protocols in voluntary and compliance markets, iv) establishing methods for enforcement and clear liabilities in cases of non-compliance, v) reviewing credit demand associated with corporate commitments and jurisdictional disclosure requirements.
The Hub will bring together key participants from around the world and representatives from relevant stakeholder groups to discuss specific issues. An advisory board will guide its work. The EUI team will prepare Policy Dialogues through policy-focused background papers, containing precise questions to be discussed. The outcomes and policy recommendations will be published in policy briefs. The dialogues will build towards the EUI Climate Week, which is the annual meeting of the EUI Carbon Markets Hub.