What The Paris Climate Agreement Means For Carbon Pricing

Since the adoption of the UNFCCC's Kyoto Protocol in 1997, a number of emissions trading markets have been created, including the self-imposed, rather stringent European emissions trading system ("EU ETS"), as well as a number of voluntary markets and exchange of carbon units or Kyoto credits. In addition, some nations or regions have adopted a carbon taxation scheme, thus giving a monetary value to carbon emissions. However, none of these systems is global, so far, and fragmented markets may not be as efficient as the potential, future worldwide carbon pricing system in order to disincentive emissions.

One of the uncertain outcomes of COP 21, which took place in Paris last December, was whether an agreement would be reached, or a framework proposed, to price carbon dioxide emissions.