Carbon Pricing

Capping greenhouse gas emissions with enforceable, declining, transferable limits drives action to cut climate pollution, and spurs innovation for better, cheaper, and faster ways of meeting pollution targets. Environmental Defense Fund’s Climate Objective is that by 2030, half of the world’s carbon dioxide emissions are covered by durable, declining limits achieved with a carbon price. 


Goal: Carbon pricing is effective in reducing emissions across all sectors, including through the European Union Emissions Trading Scheme (EU-ETS) and the International Civil Aviation Organization (ICAO) and International Maritime Organisation (IMO) for international aviation and shipping.

Leadership in Europe

Europe is the third largest global emitter after China and the United States, and has been at the forefront of imposing legally binding caps on emissions. The EU-ETS has for over a decade been the world’s largest carbon market. EDF Europe works to ensure that the region stays on course with ambitious, yet pragmatic climate policies. We are also exploring how approaches that would put a price on carbon in sectors not currently covered by the trading program, such as international shipping, can build confidence in setting, meeting, and beating more ambitious targets.

International Shipping

In 2018 the IMO agreed an initial strategy to reduce their total annual emissions by at least 50% by 2050 compared to 2008, whilst embarking on a pathway consistent with the Paris Agreement temperature goals. To achieve and go beyond this target, a robust carbon pricing policy can help ensure rapid and efficient uptake of zero and low emissions technology. We can play an important role helping ensure that international shipping and aviation stay on course with ambitious yet pragmatic climate policies. Now is the perfect time to explore the benefits of market-based approaches in these non-traded sectors, and to help build confidence that overall targets can not only be met, but also even exceeded.


International Transport

Paris Agreement Parties have put forward their countries greenhouse gas emissions reduction targets, published as Nationally Determined Contributions (NDCs), but do not yet include emissions from the international aviation and shipping sectors. However, aviation and shipping both have large emission footprints – each would be a top-ten emitter on its own – and together they are among the fastest-growing sources of greenhouse gas emissions.

In 2016, the ICAO agreed to use a global market-based measure to address CO2 emissions from international aviation, and the Environmental Defense Fund Europe will continue to advocate for environmental integrity in the implementation of its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

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Bolster ambition

The rules governing the EU-ETS and the EU’s Effort Sharing Regulations (ESR) for the period 2020-2030 have been agreed. The ETS allows for the trading of emission certifications between industry members, while the ESR assigns different emission reduction targets to EU member states depending on their capabilities. Under the EU-ETS, action is needed to restore the tension between emissions and the cap and the guarantee the cap gives political leaders is a strong reason why the EU could and should offer higher targets to the Paris Climate Agreement. However, supporting deep decarbonisation strategies in industries covered by the cap will be key to achieving higher ambition. In the ESR, confidence is low among many Member States that targets can be achieved. Harnessing market forces more effectively can help to maximise efficiency while keeping costs low. 

EDF is monitoring the effectiveness of the EU-ETS and draws on best practice experience from around the world to advocate for greater use of market forces to deliver climate ambition. We are working with others to increase amand engaging in Europe’s 2050 climate strategy development. 

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EU Emissions Trading System

The EU is on course to exceed its 40% emission reduction target from 1990 levels by 2030. Furthermore, the EU's long-term emission reduction targets are not consistent with the Paris Agreement’s long-term temperature goals. The EU has acknowledged this by initiating the process to increase its level of ambition to reflect the 1.5°C temperature limit and in considering a mid-century climate goal. More effective use of market forces including through further tightening the EU-ETS cap, can ensure Europe leads in cost effective ways with a high degree of confidence that targets will be met.

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