Josephine V. Yam

The Accelerated Growth of Carbon Markets

"Right now, the carbon markets of the future are under construction in all corners of the world", enthused Rachel Kyte, Vice President of Sustainable Development at the World Bank, in a recent Huffington Post article.

According to Kyte, at least 35 countries, 18 sub-national jurisdictions in the U.S. and Canada, and 7 Chinese cities and provinces will eventually be launching their own carbon markets to reduce their greenhouse gas emissions (GHG).

For example, China has vocally expressed its resolute determination to use the "magic of the market" of emissions trading as a way of greening its robust economy. The Chinese government believes that the creation of its own national carbon emissions market will serve as a very efficient strategy to achieving a sustainable green economy.

The linking of carbon markets with one another is crucial to achieving cost efficiencies in reaching a global carbon price for carbon credits. To this end, the World Bank established the Partnership for Market Readiness (PMR) in 2011, which has brought together over 30 developed and developing countries to consolidate their efforts in creating market-based instruments for GHG emissions reduction, including the creation of emissions trading schemes. Indeed, this bottom-up approach may prove to be a more effective way to successfully combat climate change.