Countries trading greenhouse gas emissions

Over the last three years, the global carbon market has more than doubled in volume but almost halved in value. In that time a further eight countries, states or cities have adopted a carbon market as their primary means for reducing greenhouse gas emissions. Yet the price for one tonne of carbon dioxide equivalent has dropped by as much as 100 per cent in some markets.

A new paper from the Parliamentary Library provides a basic overview of the size and value of the global carbon market and details exactly which countries and regions are covered by a mandatory emissions trading scheme (ETS). Here is a snapshot of that paper.

The table below provides details of all mandatory legislated ETSs. The top five, in terms of expected size and volume of trade, are the schemes in the European Union (EU), South Korea, California, Australia and Quebec. In 2015, these five schemes will require the surrender of permits representing an estimated 3200 megatonnes of carbon dioxide equivalent.

Mandatory legislated ETSs

Name	Dates and target	Per cent of emissions covered	Industries covered	Assistance to exposed industries	Permit price
Kyoto Protocol (second commitment period)	1 January 2013 to 31 December 2020 13% -18% below 1990 levels by 2020	Not known	Energy, industrial processes, solvents and other product use, agriculture, waste and land-use, land-use change and forestry	None	CERs are trading at less than €0.08 ($A0.10, April 2013)
EU ETS	-Phase 1 (2005-2007): Trial phase with modest abatement aims -Phase 2 (2008-2012): 8% below 1990 levels -Phase 3 (2013-2020): 21% on 2005 levels	-Phase 1: 40% -Phase 2: 40% -Phase 3: 43%	-Phase 1: power generators and energy-intensive industry (only CO2) -Phase 2: power stations & other combustion plants, oil refineries, coke ovens, iron & steel plants & factories making cement, glass, lime, bricks, ceramics, pulp, paper & board (mainly CO2 but some N2O optional) - 2012: add aviation  -Phase 3: add petrochemicals, ammonia & aluminium + N2O emissions from production of nitric, adipic & glyocalic acid production & PFCs from aluminium sector + emissions from CCS	-Phase 1: 95% of permits for free -Phase 2: 90% of permits for free -Phase 3: less than 50% for free; none for the power sector; industry get free permits up to 80% of benchmark; heavy emitters get free permits up to 100% of benchmark	Curently about €3.9 ($A4.90, April 2013)
Australia's Carbon Pricing Mechanism	Started in 2012 and targets 5% below 2000 levels by 2020	About 60%	Electricity generation, mining, industrial processes, fugitive emissions, non-legacy waste and construction	66% of permits for free to moderately emissions intensive activities and 94.5% for highly emissions intensive activities.	Starting at a fixed $A23 for 2012–13
NZ ETS	Started in 2008 and targets 10% to 20% below 2000 levels by 2020.	About 50%	- 2008: forestry - 2010: liquid fossil fuels, stationary energy & industrial processes	All permits free to emissions-intensive, trade exposed, some free to forestry	About $NZ2 ($A1.60, April 2013)
Swiss ETS	Started in 2008 an targets 20% below 1990 levels by 2020	Not known	Same as EU ETS	None to the power sector; Free permits to EITE based on benchmarks of industry-wide emissions intensity and an adjustment factor based on relocation risk of different industries	Not known
South Korean ETS	Will start in 2015 and target 45% below 2005 levels by 2020	About 60%	All industry, buildings & power generation	100% of permits for free, decreasing gradually from 2018	N/A
Kazakhstan ETS	Started in 2013 and targets 15% below 1990 levels by 2020	About 80%	Manufacturing, mining, metallurgy, chemicals, agriculture & transport	Not known	Not known
Regional Greenhouse Gas Initiative (RGGI)	Started in 2009 and targets 10% on 2009 levels by 2018	About 25%	Power generation	None	About $US2.55 ($A2.50 April 2013)
Californian cap-and-trade	Started in 2013 and targets 1990 levels by 2020	About 35% 2013–15 About 85% from 2015	Electricity generation and industrial sources	Free permits for 90% of average emissions, based on a benchmark. Amount of free permits decreases annually	Around $US14.50 ($A14.10 April 2013) There is an auction floor price of $US10.71
Quebec cap-and-trade	started in 2013 and targets 20% on 1990 levels by 2020	25 to 30% 2013–15 75-80% from 2015	Power generation, mining and manufacturing	Free allocation of 80% or 100% depending on the type of emissions	N/A There is an auction floor price of $C10.50 (+inflation) increasing by 5% annually. There is also an allowance reserve to cap price at $C40 to $C50
Alberta-Based Greenhouse Gas Reduction Program	Started in 2007 and targets a 12% reduction in emissions intensity of covered entities	About 50%	Power and heat generation, industry	N/A	Between $C8 and $C12 in 2010
Tokyo cap-and-trade	Started in 2010 abd targets 6% below base-levels by 2014 and 17% by 2019	About 20% of total Tokyo emissions	Buildings and industrial facilities from industrial, commercial, residential and transport sectors	All permits are allocated free	Around $US100 ($A95.50 Dec 2012)
Saitama cap-and-trade	Started in 2011 and targets 7% below base-year levels by 2014	Not known	Same as Tokyo	All permits are allocated free	Not known