Emerging Carbon Markets: Experiences, Trends, and Challenges

The report analyzes a diverse array of cap-and-trade systems, from the established EU ETS to emerging pilots in China and South Korea. It argues that the success of these markets depends heavily on long-term political commitment, robust data collection, and centralized decision-making to avoid over-allocation. The authors highlight a shift in the center of carbon market activity toward Asia-Pacific economies, which are experimenting with novel scopes including buildings and indirect emissions.

• The European Union Emissions Trading System (EU ETS) demonstrated that decentralizing allowance allocation to Member States can lead to an excessive supply of permits due to domestic political pressure to protect industry.
• The Regional Greenhouse Gas Initiative (RGGI) showed that auctioning revenues can generate significant macroeconomic benefits and support energy efficiency investments even when the overall cap is too generous to be environmentally effective.
• China is implementing a bottom-up approach to carbon trading, using pilot schemes in seven regions (including Beijing, Shanghai, and Guangdong) to gather experience before potentially launching a national system from 2015.
• The Tokyo ETS provides a model for urban cap-and-trade by targeting commercial and institutional buildings and industrial facilities, utilizing a phased approach that moved from voluntary to mandatory participation.
• The Western Climate Initiative (WCI) faced significant political setbacks, with several jurisdictions like Montana and Utah withdrawing due to the influence of fossil fuel industries and a lack of long-term political commitment to climate policy.
• South Korea's emissions trading scheme, planned to cover approximately 60% of national emissions, includes a penalty for non-compliance set at three times the market price per tonne of CO2, capped at 100,000 won.
• A critical lesson across systems is the necessity of a 'learning phase' or phased-in approach to collect accurate emissions data, which allows regulators to recalibrate caps and justify amendments to the system.
• Market oversight is essential to prevent criminal activity and fraud, as evidenced by the EU ETS where approximately 3.36 million allowances were stolen through security breaches and cyber-thefts.
• The future of global carbon markets may shift from the EU and OECD countries toward emerging economies in Asia, potentially changing the nature and style of international emissions trading.

APA

Tuerk, A., Mehling, M., Klinsky, S., & Wang, X. (2013). Emerging Carbon Markets: Experiences, Trends, and Challenges. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2016/01/CS-Emerging-carbon-Markets-06-02-2013.pdf

Chicago

Tuerk, Andreas, Michael Mehling, Sonja Klinsky, and Xin Wang. Emerging Carbon Markets: Experiences, Trends, and Challenges. Climate Strategies, 2013. https://climatestrategies.org/wp-content/uploads/2016/01/CS-Emerging-carbon-Markets-06-02-2013.pdf.

Wikipedia

{{cite report |last1=Tuerk |first1=Andreas |last2=Mehling |first2=Michael |last3=Klinsky |first3=Sonja |last4=Wang |first4=Xin |title=Emerging Carbon Markets: Experiences, Trends, and Challenges |publisher=Climate Strategies |date=January 2013 |url=https://climatestrategies.org/wp-content/uploads/2016/01/CS-Emerging-carbon-Markets-06-02-2013.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tuerk2013emerging, author = {Tuerk, Andreas and Mehling, Michael and Klinsky, Sonja and Wang, Xin}, title = {{Emerging Carbon Markets: Experiences, Trends, and Challenges}}, institution = {Climate Strategies}, year = {2013}, month = jan, url = {https://climatestrategies.org/wp-content/uploads/2016/01/CS-Emerging-carbon-Markets-06-02-2013.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }