In the wake of the Copenhagen Accord in 2009 and amid frustration with the slow pace of the United Nations Framework Convention on Climate Change (UNFCCC) talks, a number of bilateral and plurilateral efforts and technology initiatives has been launched to deal with international climate policy. Bilateral efforts such as the November 2014 joint announcement between the United States (US) and China have provided welcome momentum. These minilateral efforts, together with the broader multilateral ones, constitute the emerging “regime complex” for climate change. In such a world, ambition in climate action must come from national governments as well as from international agreements. For promoting such ambition, key tools include market-based mechanisms that cap emissions of carbon dioxide and other global warming pollutants, and allow nations and firms that reduce emissions below capped levels to save, sell, and trade surplus units of allowable emissions. Such systems are in effect today in more than 50 countries, states, cities, and provinces where almost a billion people live.
To promote the spread of such policies, ensure their integrity, and drive the deep reductions needed to limit the worst impacts of climate change, this paper proposes the formation of a club of carbon markets (CCM)—a group of jurisdictions that develop harmonized standards for carbon market operations and mutually recognize each other’s emission units.