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BARCELONA, 24 May – Two-thirds of respondents to IETA’s annual GHG Market Sentiment survey think that the rise of populist political movements globally are a threat to action on climate change, despite a high level of executive engagement.
Conducted by PwC, the survey of 135 IETA members from across the globe raised widespread concerns that an increase in nationalist policies could hinder an international response to climate change, with one respondent urging market participants to go on a “PR offensive” extolling the virtues of emissions trading.
However, over three quarters (77%) of respondents said that climate change is a board-level priority – and 90% said board engagement on the issue has either increased or remained the same year-on-year.
“The high of seeing the Paris Agreement enter into force last year was tempered by an increase in populist political movements that have pushed climate change down the agenda,” says IETA President and CEO Dirk Forrister. “While the changing political headwinds are cause for concern, we are encouraged by those that are stepping up to lead on climate action. Nationalism and isolationism won’t solve this global problem.”
He adds: “International collaboration is essential to drive action under the Paris Agreement and, as we saw in Bonn these past two weeks, countries are continuing to work on the rules for implementing the Agreement. High levels of board engagement with climate change and action will only boost these efforts.”
Survey respondents are more optimistic about national and sectoral efforts, such as China’s planned national emissions trading system, efforts across Canada, and a new market for aviation. In Canada, 69% of respondents expect the federal Pan-Canadian Framework on Clean Growth and Climate Change to drive action by the provinces and territories, while an overwhelming majority expect Ontario’s new market to link to those of Québec and California.
Meanwhile, respondents’ Phase III EUA price expectations have fallen slightly this year, but remains in the €8-11 range, consistent with the past four years. Expectations for prices out to 2030 also dipped, while the majority of respondents agree that a carbon price floor is needed in the EU ETS.
“When it comes to Brexit, 60% of respondents think that the UK will leave the EU Emissions Trading System. But linking UK climate policy to the EU ETS would be the most cost-effective approach according to some,” says Jonathan Grant, Director, PwC, who performed analysis on the survey.
“EU carbon price expectations are still in the doldrums and once again IETA members have highlighted the yawning gap between current prices and what’s needed to achieve the Paris objectives. But despite global economic uncertainties, it’s encouraging to see that business is still focused on climate action and stepping up to support the Paris Agreement.”
The survey report will be released at the Pitch Hub at Innovate4Climate in Barcelona on Wednesday 24 May at 11am CET. Hard copies will be available at the launch and it can also be downloaded from the IETA website.
This year’s IETA survey was conducted among IETA members only, with more than one response per organisation possible, and open from Thursday 30 March 2017 to Wednesday 26 April 2017. We received responses from 135 IETA member representatives, from a broad range of locations and organisation types. Participants were given some freedom to select which sections and subject matter they answered on, and therefore a number of statistics are based on samples smaller than 135.
Key findings from this year’s survey
- 64% of respondents expect populist political movements to limit action on climate change. As quoted by respondents, “emissions trading needs to go on the PR offensive and advocate its achievements more strongly or it risks being undermined during times of political uncertainties.”
- Climate change is a board-level priority for 77% of respondents. Furthermore, 90% of respondents have said that board-level engagement on climate change has either increased or remain unchanged in the last 12 months, indicating that corporates are stepping up.
- 60% of respondents expect the UK to leave the EU ETS following Brexit. Many think the UK will implement a national market but link it back to the EU ETS.
- 59% of respondents expect the EU ETS reform to be in line with the Paris goal of limiting warming to well below 2°C. However, majority of respondents think that the EU ETS needs a price floor.
- China is seen as an emerging leader on climate action: 83% of respondents expect the Chinese ETS to encourage other countries to adopt a carbon price. The majority of respondents agree that the launch of the Chinese ETS will reduce competitiveness concerns in other countries.
- State-level initiatives and the private sector are seen to continue to drive climate action in the US. Despite threats of litigation, 90% of respondents expect the California market to exist post-2025.
- Canada’s carbon markets are expected to grow: 69% of respondents expect this to be driven by the recent Pan-Canadian Framework on Clean Growth and Climate Change. Moreover, 77% of respondents think that Ontario will link its cap-and-trade programme to the California-Québec market.
- CORSIA is expected to be the second largest source of demand for international units after the Paris Agreement. Almost half of respondents think that the IMO will implement a carbon price, mainly inspired by CORSIA.