Are Emissions Trading Schemes a Pathway to Enhancing Transparency under the Paris Agreement?

Abstract

The Paris Agreement (PA) provides the foundation and future for global carbon markets that country Parties can embrace to realize their nationally determined contributions (NDCs) in a transparent manner. The agreement references transparency throughout its text with article 13 specifically establishing an enhanced and flexible transparency framework. This framework requires all Parties to regularly submit a national greenhouse gas (GHG) inventory, provide information on progress in implementing and achieving their NDCs, as well as subject themselves to both expert and peer-to-peer review. Cooperative approaches in article 6.2 also offer a good opportunity for internationally transferred mitigation outcomes to be used by Parties to achieve their NDCs in a manner that ensures environmental integrity and enhances transparency.

More discussions have focused on carbon markets as a pathway to reducing GHG emissions while generating economic, political, and strategic benefits. This Article further frames the argument that market-based approaches such as emissions trading schemes (ETSs) can also advance the transparency objectives of the PA. Insights are offered into how developing ETSs can promote transparency in tracking GHG emissions. I analyze some features of ETSs, especially their capacity building processes that can benefit the PA’s transparency framework. I also explore how linking transboundary ETSs can improve climate data reporting and facilitate information sharing on global climate action and progress.