Since the start of carbon markets in 2002 with the UK Emissions Trading Scheme (ETS) – the first multi-industry carbon trading system – the carbon world has become a very diverse and complex place. There are now 38 carbon pricing instruments operating or in their early implementation stages across the globe, with the share of emissions covered by those instruments having increased threefold over the last decade.
To effectively compare and contrast carbon markets we have chosen six key design elements to discuss, namely:
- The cap
- Allocation methodologies
- Cost containment
- Monitoring Reporting Verification (MRV)
- Market oversight