A new global climate deal due to be agreed at UN talks in Paris later this year must allow carbon trading between countries to enable emissions trading systems around the world to link-up in future and ensure the world cuts climate-changing emissions in the most cost-effective way possible.
That is one of the main findings of the report by MPs on the Westminster parliamentary Energy Committee.
Chairman Tim Yeo MP, explained: “Putting a price on carbon is absolutely essential if we are to curb the greenhouse gas emissions that cause climate change.
“But using taxes to set a carbon price does not guarantee any particular level of emissions reduction because the emitters may simply pay the tax and carry on polluting.
“Emissions trading allows us to set a cap on emissions and enables participating businesses to identify the most cost effective ways of reducing their emissions. Letting the market determine the price of carbon in this way is likely to be far more effective and politically palatable than carbon taxes.”
To facilitate the development of a global carbon market that could cap overall emissions at a safe level – and keep temperature rises below the 2 degree danger threshold – any agreement reached at the UNFCCC COP 21, in Paris at the end of 2015, must ensure that in future it will be possible to link the disparate regional, national and subnational emissions trading systems that have emerged around the world.
Yeo added: “A global carbon market would ultimately be the best way to keep the world within a safe carbon budget because it is one of the most economically efficient ways to reduce emissions.
“Although there is no prospect of establishing emissions trading on a global scale in the immediate future,an international climate agreement that promotes carbon pricing and is favourable to linking represents the best chance of developing such a market in the long term.