unstable prices, the desired effect of stimulating changes within the energy system
has been weaker than expected. However,
many companies have now adopted shadow carbon prices, under the anticipation
that carbon pricing would impact returns
on their investments. But the weaker than
expected development of ETS has led to
concerns over companies dropping these
screening measures. This highlights the
need to ensure greater coverage, with
stable, predictable and significant prices.
The lull in momentum to expand carbon
pricing, either as a trading system or as a
tax, has recently reversed. The Carbon
Pricing Leadership Coalition (CPLC) represents 21 countries, five Canadian and US
states, and almost 140 global corporations.
In January 2016 the CPLC challenged
global governments to double carbon
pricing coverage by 2020 and double again
by 2030. Further, the Climate Leadership
Council recently proposed a $40/tonne
carbon tax and dividend scheme in the
USA, including a carbon border adjustment tax.
The pathway to the national Chinese ETS is under way. However, the
uncertainty over allowance holders within
China’s regional ETS pilots being able to
transfer to the national ETS is hampering
the 2017 intended launch of the national
ETS. Lack of transparent market information within the pilots has also reduced the
volumes traded relative to the cap, compared to other ETS such as California.
While a global carbon market is unlikely in the short to medium term, linking
existing carbon markets is generally
accepted to increase the effectiveness of
national markets. Considering the national
ETS in China is due to commence in 2017,
one significant policy consideration is the
future linking to the EU or South Korean
market. If carbon clubs or bilateral links to
other ETS are to emerge, greater transparency within the Chinese ETS will be
critical. Given the potential size of the
Chinese ETS, if it fails to deliver a stable
and effective carbon price, carbon trading
is likely to face a considerable challenge in
convincing international policymakers that
continued development of carbon markets
is an effective climate policy pathway.
6 Making Global Energy
Governance Fit for the Future
Much of the current global energy governance
architecture has evolved from arrangements to
address oil security concerns stemming from the
oil shocks of the 1970s. However, the effectiveness of these mechanisms—specifically the
emergency response mechanism of the International Energy Agency (IEA)—has been gradually eroded by the shift in hydrocarbon demand
from IEA member countries of the OECD to
emerging economies outside of the regime.
More recently, with around two-thirds of
global greenhouse gas emissions coming from
the energy sector, decarbonisation has moved to
the centre of the energy policy agenda. An
increasingly analytical focus on low-carbon
transition is evident within organisations like
the IEA and with the establishment of new
multilateral institutions, such as the German-led
International Renewable Energy Association.
Meanwhile, multilateral development banks,
such as the World Bank, have scaled up their
technical assistance and financial commitments
for cleaner energy.
Although outside the sphere of traditional
energy governance, the establishment of the
United Nations Framework Convention on Climate Change in 1990 and the Paris Agreement in
2015 have had profound implications. The latter
provides the pillars of a new global climate
regime: a transparency framework for the measurement and reporting of emission reductions
and actions; a long-term goal to reduce global
greenhouse gas emissions to net zero and limit
632
W. Jigang and P. Webb
has been weaker than expected. However,
many companies have now adopted shadow carbon prices, under the anticipation
that carbon pricing would impact returns
on their investments. But the weaker than
expected development of ETS has led to
concerns over companies dropping these
screening measures. This highlights the
need to ensure greater coverage, with
stable, predictable and significant prices.
The lull in momentum to expand carbon
pricing, either as a trading system or as a
tax, has recently reversed. The Carbon
Pricing Leadership Coalition (CPLC) represents 21 countries, five Canadian and US
states, and almost 140 global corporations.
In January 2016 the CPLC challenged
global governments to double carbon
pricing coverage by 2020 and double again
by 2030. Further, the Climate Leadership
Council recently proposed a $40/tonne
carbon tax and dividend scheme in the
USA, including a carbon border adjustment tax.
The pathway to the national Chinese ETS is under way. However, the
uncertainty over allowance holders within
China’s regional ETS pilots being able to
transfer to the national ETS is hampering
the 2017 intended launch of the national
ETS. Lack of transparent market information within the pilots has also reduced the
volumes traded relative to the cap, compared to other ETS such as California.
While a global carbon market is unlikely in the short to medium term, linking
existing carbon markets is generally
accepted to increase the effectiveness of
national markets. Considering the national
ETS in China is due to commence in 2017,
one significant policy consideration is the
future linking to the EU or South Korean
market. If carbon clubs or bilateral links to
other ETS are to emerge, greater transparency within the Chinese ETS will be
critical. Given the potential size of the
Chinese ETS, if it fails to deliver a stable
and effective carbon price, carbon trading
is likely to face a considerable challenge in
convincing international policymakers that
continued development of carbon markets
is an effective climate policy pathway.
6 Making Global Energy
Governance Fit for the Future
Much of the current global energy governance
architecture has evolved from arrangements to
address oil security concerns stemming from the
oil shocks of the 1970s. However, the effectiveness of these mechanisms—specifically the
emergency response mechanism of the International Energy Agency (IEA)—has been gradually eroded by the shift in hydrocarbon demand
from IEA member countries of the OECD to
emerging economies outside of the regime.
More recently, with around two-thirds of
global greenhouse gas emissions coming from
the energy sector, decarbonisation has moved to
the centre of the energy policy agenda. An
increasingly analytical focus on low-carbon
transition is evident within organisations like
the IEA and with the establishment of new
multilateral institutions, such as the German-led
International Renewable Energy Association.
Meanwhile, multilateral development banks,
such as the World Bank, have scaled up their
technical assistance and financial commitments
for cleaner energy.
Although outside the sphere of traditional
energy governance, the establishment of the
United Nations Framework Convention on Climate Change in 1990 and the Paris Agreement in
2015 have had profound implications. The latter
provides the pillars of a new global climate
regime: a transparency framework for the measurement and reporting of emission reductions
and actions; a long-term goal to reduce global
greenhouse gas emissions to net zero and limit
632
W. Jigang and P. Webb