To achieve global emission reductions at increased speed to meet the 1.5 degrees target of the Paris Agreement, the EU actively engages with countries outside the EU to promote the green transition and decouple growth from emissions.
The Task Force for International Carbon Pricing and Markets Diplomacy is a Commission initiative that specifically aims to promote the development of carbon pricing and carbon markets worldwide. The Task Force engages with and supports partner countries to develop effective carbon pricing policies and robust approaches to international carbon markets to reduce greenhouse gas (GHG) emissions and contribute to sustainable development.
The Task Force was announced as part of the Commission Communication on the 2040 Climate Target in February 2024.
The call to action for Paris-aligned carbon markets
The Task Force aims to follow through with the Call to Action for Paris-aligned carbon markets, which the EU joined at its launch at the Summit for a New Global Financing Pact hosted by French President Macron in June 2023. The Call puts forward key principles and actions that should be implemented to ensure the effectiveness of carbon markets.
The work of the Task Force centres around the Call’s three pillars:
- Advance the expansion and strengthening of domestic compliance carbon pricing and carbon market instruments (or compliance markets in short), such as emissions trading systems or carbon taxes, in other jurisdictions;
- Support partner countries for the full implementation of the agreed rulebook for international compliance markets under Article 6 of the Paris Agreement;
- Ensure high integrity in voluntary carbon markets.
Domestic carbon pricing instruments
Domestic carbon pricing instruments, like the EU Emissions Trading System, have demonstrated their capacity to reduce greenhouse gas emissions in a cost-effective manner. They can also raise substantial revenues and promote innovation.
A growing number of countries, including the majority of G20 countries, are implementing or exploring some form of domestic carbon pricing – compliance instruments (emissions trading systems and carbon taxes) and/or domestic carbon crediting mechanisms. According to the World Bank State and Trends of Carbon Pricing Dashboard, there are 75 carbon pricing instruments in place in 2024, covering 24% of global emissions. The growing uptake of these instruments can significantly help global emission reductions.
In the EU, carbon pricing has played an important role in reducing greenhouse gas emissions, with a 47% cut achieved in sectors covered by the EU Emissions Trading System since its launch in 2005. Today, the EU’s share of global emissions is lower than 7% and declining.
Building on the EU’s successful experience, the Task Force primarily aims to share the EU’s lessons learned and support other jurisdictions in designing and implementing effective domestic compliance carbon pricing and carbon market instruments (such as carbon taxes or emissions trading systems).
With this, we aim to raise the share of global emissions effectively covered by a carbon price. We support Canada’s Global Carbon Pricing Challenge, which calls on all countries to adopt carbon pricing as a central part of their climate strategies, toward a collective goal of covering 60% of global emissions by 2030, to accelerate greenhouse gas mitigation globally and reduce the risk of carbon leakage.
International carbon markets
Domestic market-based instruments are complemented by regulated international carbon markets, which allow countries to pursue collaborative approaches to reach their climate targets (as set out in Article 6 of the Paris Agreement), and voluntary carbon markets, where private actors voluntarily buy and sell carbon credits.
These markets have a role to play in contributing to increased ambition for decarbonisation and helping to fill the investment gap for climate change mitigation across regions and economic sectors, provided their environmental and social integrity is ensured via robust standards.
Without such safeguards, there is a risk that the use of international carbon markets could undermine or delay necessary climate action. Robust implementing rules for Article 6 of the Paris Agreement and harmonised high integrity standards for voluntary carbon markets will be key to enable positive impact and help unfold the potential of international carbon markets.
To this end, at the international level, the EU seeks to ensure that an agreement on ambitious rules for the operationalisation of Article 6 will be agreed in the UNFCCC and implemented.
The Task Force aims to support partners in their consideration of their carbon market engagement as part of ambitious national climate change mitigation and development strategies.
The Task Force also supports initiatives that aim to strengthen the integrity of carbon markets internationally. At EU level, the proposed Green Claims Directive would regulate corporate claims, including those related to climate aspects. The Carbon Removals and Carbon Farming Regulation establishes a sound voluntary framework for certifying carbon removals, carbon farming, and carbon storage in products across Europe.
Stakeholders
The Task Force aims to engage with jurisdictions with a strong interest in setting up compliance-based domestic carbon pricing and carbon market instruments. It also aims to support partner countries willing to make use of regulated international carbon markets and/or high-integrity voluntary carbon markets to achieve climate goals, as well as stakeholders, from the public or private sector, involved in voluntary carbon markets.
In addition, the Task Force participates in relevant international cooperation initiatives, such as the International Carbon Action Partnership (ICAP), the World Bank’s Partnership for Market Implementation, the Global Carbon Pricing Challenge and the OECD’s Carbon Market Platform.
The Task Force is looking forward to engaging with all partner countries, international organisations and other stakeholders willing to enhance the role of carbon markets to achieve the objectives of the Paris Agreement.
