29 January 2018: In January, Canada kicked-off its nation-wide carbon pricing strategy. In emissions trading scheme (ETS) news, the US state of New Jersey is rejoining a regional greenhouse gas (GHG) initiative after six years, and Kazakhstan launched its reformed ETS.

In January 2018, Canada began the implementation of its national carbon pricing strategy, announced in 2016. The carbon pricing scheme is part of the Pan-Canadian Framework on Clean Growth and Climate Change, which aims to reduce emissions and build climate resilience while ensuring economic growth. Canada has set a goal to reduce its GHG emissions by 30% below 2005 levels by 2030. Under the national scheme, Canada’s provinces and territories can choose their approach to carbon pricing using either an explicit price or a cap-and-trade scheme. In 2019, the Canadian government will implement a federal-level pricing backstop that will apply to provinces and territories that either request this or that do not have an adequate pricing system in place. A draft legislative proposal for this federal backstop will be made available for comment in early 2018. In a comment, environmental advocacy group Carbon Market Watch noted that the Canadian federal government must negotiate with ten provinces, suggesting that this means on the one hand that the new plan is likely to force provinces to do more to reduce emissions. On the other hand, the flexibility and autonomy allowed in implementation “could undermine its performance.” [Government of Canada Webpage on Carbon Pricing] [Carbon Market Watch Commentary]

In ETS news, the US state of New Jersey is on track to rejoin the US Regional Greenhouse Gas Initiative (RGGI) of nine states after incoming state Governor Philip D. Murphy (Democrat), elected in November 2017, signed an executive order that initiates a rule making process for re-entry. New Jersey, a founding member of the RGGI, left the initiative in 2012 under Governor Chris Christie (Republican). The International Carbon Action Partnership (ICAP) reported that New Jersey’s power sector emissions increased by 15% between 2011 and 2015 while those in the other RGGI states decreased. [ICAP Story]

After two years in suspension, Kazakhstan relaunched its ETS on 1 January 2018. The revamped ETS includes new provisions and targets, including a three-year national allocation plan and an emissions cap of 5% below 1990 levels by 2020. The Kazakh ETS now comprises 225 installations and 130 companies in the energy and industrial sectors. To support the relaunched ETS, Kazakhstan has also developed, jointly with the World Bank, an electronic reporting system for GHG emissions from these sectors. [ICAP Story] [ICAP Kazakhstan ETS Infosheet] [World Bank Press Release]

In an effort to safeguard the environmental integrity of The EU ETS ahead of the Brexit, the UK informed the EU Climate Change Committee that it adopted a law on 27 December 2017 that advances its compliance deadline for 2018 emissions to a date preceding the UK’s withdrawal from the EU. Consequently, and in line with an EU ETS Registry Regulation endorsed by the Climate Change Committee in November 2017, allowances issued by the UK during 2018 will not be marked or accepted for surrender. [European Commission Press Release on UK Law] [European Commission Press Release on Registry Regulation]

In January events, the World Bank’s Carbon Pricing Leadership Coalition (CPLC) organized a two-day discussion among 100 financial institution executives on incorporating climate risk and opportunity into business models and growth strategies. Taking place in Zurich, Switzerland, directly prior to the 2018 World Economic Forum (WEF) in Davos, the event aimed to generate inputs to WEF. The CPLC also hosted a three-day event in Santiago, Chile, for carbon market stakeholders from the Americas to discuss carbon pricing and the development of carbon markets in Latin America and the Caribbean. [CPLC Events Page]

In other January 2018 carbon pricing news:

• The UNFCCC reported that Pakistan intends to study a possible carbon pricing instrument to help the country follow a low-carbon development trajectory [SDG Knowledge Hub Story];
• The SDG Knowledge Hub reported on the launch of China’s national carbon market, which, according to a comment by Carbon Market Watch “moves theworld closer to global pollution pricing” [SDG Knowledge Hub Story]; and
• The Carbon Market Watch January 2018 newsletter contained a call for leaders at the WEF to “pric[e] carbon at levels that will put us on a path towards a safer future” [Carbon Market Watch newsletter].

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The SDG Knowledge Hub publishes monthly climate finance updates, which largely focus on multilateral financing and cover, inter alia, mitigation and adaptation project financing news and lessons, institutional events and news, and latest developments in carbon markets and pricing. Past IISD climate finance updates can be found under the tags: Finance Update: Climate Change; and Finance Update: Sustainable Energy.