Tendencias y Estudios / Convergencia y sostenibilidad

Implementing Effective Emissions Trading Systems

Emissions trading systems are well suited to accelerate the clean energy transition in the power sector. Electricity and heat generation account for over 40% of global energy-related CO2 emissions, with 30% of energy-related CO2 emissions coming from coal-fired power plants. The power sector is already decarbonising worldwide, due to falling low-carbon technology costs and low competitiveness risks, but not quickly enough to meet the Paris Agreement goals.

The power sector is particularly well-suited to be covered by an emissions trading system. First, it is a large emitting sector with proven, low-GHG technologies that are commercially available. Second, data availability for electricity generation is on average strong across jurisdictions, which is needed to determine allocation benchmarks. Moreover, several jurisdictions already have experience in implementing power sector mitigation activities with the support of carbon pricing, for instance through crediting mechanisms such as the Clean Development Mechanism.