By Maria Belen Ahumada
Adopted in 1997, the Kyoto Protocol set the basis for the development of a carbon market with the goal of limiting and reducing GHG emissions of industrialised countries and economies, in accordance with agreed targets by each member. The creation and regulation of this market was thought as an instrument to facilitate signatories to comply with emission targets (‘Parties’ assigned amount’), or global ceilings for greenhouse gas emissions.
In part two of this four-part research series, Maria Belen Ahumada provides an overview of compulsory and voluntary carbon markets. She focuses on the European regulated carbon market as she walks us through the EU ETS, addressing the role of the government, the market structure, the main products of the primary and secondary market as well as the main supply and demand drivers of carbon price. In addition, Belen outlines some of the main differences between regulated and non regulated carbon markets and discusses useful final remarks as we approach COP 26.