International Carbon

Action Partnership

EMISSIONS
TRADING
WORLDWIDE
EXECUTIVE SUMMARY

STATUS REPORT 2023

1  ICAP Status Report 2023
EMISSIONS
EDITORIAL TEAM:

Zhibin Chen, Stefano De Clara, Baran Doda, Alexander Eden, Maia Hall, Leon Heckmann,

TRADING Iryna Holovko, David Hynes, Martina Kehrer, Stephanie La Hoz Theuer, Trevor Laroche-
Theune, Andrés Olarte Peña, Victor Ortiz Rivera, Santiago Ramírez Niembro, Anastasia

WORLDWIDE
Steinlein, Theresa Wildgrube.

The ICAP Secretariat expresses its gratitude to policymakers from the ICAP
membership and further collaborators from the emissions trading field, who
INTERNATIONAL CARBON ACTION PARTNERSHIP provided insightful written contributions and/or carefully reviewed the report:
STATUS REPORT 2023 Robin Damberger (Austria), Petra Krems-Ladenberger (Austria), Henrik Neier (Austria),
Fabian Stöckl (Austria), Luiz Mauricio de Araujo Navarro (Brazil), Raquel Breda dos
Santos (Brazil), Gustavo Saboia Fontenele e Silva (Brazil), Rachel Gold (California),
Bob Languell (California), Shelby Livingston (California), Amy Ng (California),
Rajinder Sahota (California), Mark Sippola (California), Camille Sultana (California),
Jeff Lindberg (Canada), Simon Tudiver (Canada), Marijke Vermaak (Canada), Maria Jose
García Cabello (Chile), Juan Pedro Searle (Chile), Isabella Villanueva (Chile), Yi
Zou (China Beijing Environment Exchange), Qiang Li (Chongqing International
Investment Consultation Group), Marco Antonio Murcia Baquero (Colombia), Polona
Gregorin (European Commission), Damien Meadows (European Commission), Mette
CITE AS: Quinn (European Commission), Joao Serrano Gomes (European Commission),
Beatriz Yordi (European Commission), Julia Ziemann (European Commission),
ICAP (2023). Emissions Trading Worldwide: Status Report 2023. Jos Delbeke (European University Institute), Michael Themann (Germany), Dirk
Berlin: International Carbon Action Partnership. Weinreich (Germany), Saurabh Diddi (India), Dida Gardera (Indonesia), Ministry of the
Environment of Japan, Botagoz Akhmetova (Kazakhstan), Muhamad Ridzwan Bin Ali
(Malaysia), Ahmad Farid Bin Mohammed (Malaysia), Mohd Hafdzuan Adzmi (Malaysia),
Zainorfarah Zainuddin (Malaysia), William Space (Massachusetts), Diana Karin
Guzmán Torres (Mexico), Suriel Islas Martínez (Mexico), Jelena Ban (Montenegro),
Ranko Lazovic (Montenegro), Jonathan Binder (New York State), Lois New (New York
State), Sarah Deblock (New Zealand), Freeya Farrar (New Zealand), Scott Gulliver (New
Zealand), Kyla van Heerden (New Zealand), Ted Jamieson (New Zealand), Jacqueline
Ruesga (New Zealand), Robert Ondhowe (Nigeria), Katherine Quinlan (North Carolina),
Randy Strait (North Carolina), Jonas Goldman (Nova Scotia), Nancy Rondeaux

2 Emissions ICAP Status Report 2023

 (Nova Scotia), Andrew Webber (Nova Scotia), Whitney Dorer (Oregon), Rachel
Fernandez (Oregon), Nicole Singh (Oregon), Hadika Syeda Jamshaid (Pakistan), Jennie
Demjanick (Pennsylvania), Louie Krak (Pennsylvania), Ottmar Edenhofer (Potsdam
Institute for Climate Impact Research), Michael Pahle (Potsdam Institute for Climate
Impact Research), Jonathan Beaulieu (Québec), Claude Côté (Québec), Julie Côté
(Québec), Steve Doucet-Héon (Québec), Nicolas Garceau (Québec), Olivier Lacroix
(Québec), Kim Ricard (Québec), Mourad Ziani (Québec), Ministry of the Environment
of the Republic of Korea, Jin Li (Shanghai Environment and Energy Exchange),
Lishen Li (SinoCarbon), Siyue Liu (SinoCarbon), Simon Fellermeyer (Switzerland),
Thomas Kellerhals (Switzerland), Rongphet Bunchuaidee (Thailand), Pathom
Chaiyapruksaton(Thailand), Phakamon Suparppunt (Thailand), Noriko Adachi
(Tokyo Metropolitan Government), Aoki Tomotaka (Tokyo Metropolitan Government),
Abdulkadir Bektaş (Türkiye), Kaan Moralı (Türkiye), Okan Uğurlu (Türkiye), Öykü Uyanık
(Türkiye), Pavlo Masiukov (Ukraine), Olga Yukhymchuk (Ukraine), Rufina Acheampong
(United Kingdom), Ishtar Ali (United Kingdom), Joe Cooper (United Kingdom),
Matthew Davies (United Kingdom), Seamus Gallagher (United Kingdom), Joe Glynn
(United Kingdom), Charlie Lewis (United Kingdom), Hannah Lewis (United Kingdom),
Jacob Rose (United Kingdom), Greg Smith (United Kingdom), Brian Woods (Vermont),
Tang The Cuong (Vietnam), Luong Quang Huy (Vietnam), Mai Kim Lien (Vietnam), Bill
Drumheller (Washington), Luke Martland (Washington).

The ICAP Secretariat is grateful to the Federal Ministry for Economic Affairs and
Climate Action, Germany, for funding this report. adelphi consult GmbH lends scien-
tific and technical support to the ICAP Secretariat and coordinated the compilation
and production of the report.

We wish to thank Katie Kouchakji (KKE Communications) for her careful editing and
proofreading of the report, as well as for her communication advice.

A special thanks to Carolin Faulenbach and Janibel Munoz Torres for editorial
assistance.

3 Emissions ICAP Status Report 2023

 This year’s edition marks the 10th anniversary of the International Carbon Action Partnership
(ICAP) Status Report and provides a good opportunity to look back at developments in emissions
trading systems (ETSs) over the last decade. Since the first Status Report, the number of ETSs in
operation has more than doubled, growing from 13 to the current 28, and so too did the share of
global emissions covered by an ETS, which jumped from 8% to 17%, following the increase from
below 4 gigatons in 2014 to the current 9 gigatons.

Beyond the bare numbers, it is remarkable to look back and see what themes and developments
characterized the first ICAP ETS Status Report in 2014. The report’s foreword opened by sorely noting
that “despite years of international negotiations, a comprehensive global accord to halt climate
change remains elusive”. In the report’s first signed article, EU policymakers reflected on the ongoing
debate around backloading in the EU ETS, a measure aimed at mitigating overallocation in the system
due to the global economic downturn that followed the 2008 financial crisis. Other articles focused
on the lessons learned from the first few months of operation of the Shenzhen carbon market, China’s

EXECUTIVE
first pilot ETS, and on the experiences with the investment of auction proceeds in the Regional Green-
house Gas Initiative (RGGI), which was the only ETS with extensive experience, given that auctioning
in other systems was just beginning. The report was eagerly awaiting the operationalization of the ETS

SUMMARY
linkage between California and Quebec, with the first joint auction scheduled for later that year, and
the launch of the Korean ETS in 2015.

Fast forward ten years and the Paris Agreement is in full force and a key driver for global climate
action. The EU ETS, along with the other existing ETSs, has fully recovered from the effects of the 2008
financial crisis, weathered a global pandemic, and is proving resilient to an unprecedented global
energy crisis. Building on the experience gained with the ETS pilots, China has launched a nation-wide
ETS, which is now the world's largest such system. The use of auction revenues has become a key
aspect in most mature systems, and it is especially useful in maintaining public support for carbon
pricing, mitigating the effects of the energy crisis, and achieving additional co-benefits. The linkage
between California and Quebec is now a prime example of successful cross-border linking and the
Korean ETS, now in its third phase of operation, is a reference for other jurisdictions in Asia. And these
are just some examples.

The last decade has not been smooth sailing. As the global economy slowly lifted itself out of the
pandemic, war in Europe has triggered yet another series of tempests that have affected many
countries across the world. The starkest of these is the ongoing energy crisis. It has not only laid
bare severe energy dependencies but has once again served as a stress test for climate policies like
emissions trading.

As governments and companies address these challenges both in the immediate and mid- to longer
term, it is important to keep sight of ambitious climate targets and commitments to net zero by

4 Executive Summary ICAP Status Report 2023

mid-century. At the same time, vulnerable segments of the population must be protected The Russian invasion of Ukraine in early 2022 made Europe’s energy dependence painfully
through supportive policies to ensure a socially just green transition. Emissions trading clear, just after the EU committed to becoming climate neutral by 2050 and reduce net
remains pivotal in this context and lies at the core of decarbonization strategies in an emissions by 55% by 2030, compared to 1990. The war has significantly impacted climate
increasing number of jurisdictions. policy. In his article, Jos Delbeke of the European University Institute and former Direc-
tor-General of the European Commission’s DG for Climate Action, raises the question: are
This 10th edition of the ICAP Emissions Trading Worldwide report provides a compre- energy security and decarbonization compatible goals? He lays out the importance of
hensive analysis of the latest developments and key trends in the ETS space from the past combining Europe’s energy security and climate objectives and engaging in strong bilateral
year. It includes a series of infographics that illustrate important ETS facts and figures, as and multilateral cooperation. Looking ahead, the EU must leverage its Green Deal, energy
well as detailed factsheets on all systems currently in force, under development, or under policies, and carbon pricing mechanisms to accelerate the transition.
consideration.
As the energy crisis has taken hold, there are further lessons to be learned as we push ahead
The report confirms the growing momentum for the ETS developments, as the number of with carbon pricing. An article by Ottmar Edenhofer and Michael Pahle of the Potsdam
systems continues to rise. There are now 28 such systems in force, three more than last Institute for Climate Impact Research highlights how the EU has successfully upheld its
year, with 20 more systems under development or consideration across the world, particu- climate ambitions, despite concerns that carbon pricing would directly expose house-
larly in the Latin American and Asia-Pacific regions. For the first time, we see concrete steps holds to increased costs and wane public support for broader climate policy. The authors
towards emissions trading being taken in Africa. The share of global emissions covered by emphasize the need to integrate all reforms with other policy domains, such as social policy
an ETS remains unchanged at 17%, as the increase in coverage thanks to the introduction to protect vulnerable communities and energy security to leverage its synergy with climate
of new systems was offset by the overall reduction in emissions under ETS caps – as is policy and foster European solidarity.
expected from systems designed to reduce emissions.
The EU has moved rapidly to address the urgent climate crisis, committing to reducing
Despite the challenging and unprecedented global backdrop, existing systems showcased net GHG emissions by at least 55% below 1990 levels by 2030. An article by the European
maturity and proved to be remarkably resilient to significant external shocks. Systems Commission details how the bloc’s climate and energy policy, including the EU ETS, has
currently in operation have weathered an eventful year without major disruptions. After been undergoing revisions to support this goal. These reforms include a reduced cap,
making significant gains in 2021, prices in most systems started and ended 2022 at around expansion of the ETS’s coverage to maritime transport, and more concerted use of the
the same levels, despite some fluctuations over the course of the year. The observation that Innovation Fund and Modernisation Fund to catalyze the deployment of low-carbon
allowance prices did not rise in 2022 is worth noting in the context of the ongoing energy technologies and provide support to lower-income Member States. The new EU ETS 2 will
crisis and its impacts on consumers, who have experienced significant rises in the consumer incentivize emissions reductions from road transport, buildings, and industry not covered
price index as well as its energy component. by the existing system. The accompanying Social Climate Fund will channel revenues from
emissions trading to provide dedicated support to vulnerable citizens and businesses.
Emissions trading confirmed itself to be a valuable source of revenues as 2022 marked In these ways, the EU is committed to advancing the green transition across the entire
another record, with more than USD 63 billion of actioning proceeds collected in a year. As a economy while leaving no one behind.
result of higher allowance prices and an increasing use of auctioning, more than half of the
total revenue raised by ETSs since 2008 was collected in 2021 and 2022, with many govern- Next, the United Kingdom reflects on its progress to further develop the UK ETS and engage
ments channeling these resources back into further climate action, subsidizing emerging with stakeholders, particularly amid the ongoing energy crisis. The UK ETS is at the heart
technologies, or supporting lower-income households. of delivering on the UK’s net zero target. The article emphasizes the importance of comple-
mentary policies and a holistic decarbonization approach to addressing climate change and
The report also features a collection of deep-dive articles written by policymakers and the challenge of increasing costs. It also highlights the role that carbon leakage mitigation
experts from key jurisdictions around the world, which offer valuable insights into the measures and the expansion of the scheme to new sectors could play in providing certainty
rapidly evolving ETS landscape. to the market and decarbonization efforts.

Meanwhile across the Atlantic, Québec’s cap-and-trade system, launched in 2013 and linked
to California’s program since 2014, is going strong after 10 years. Over time, it has proven
that it can withstand external shocks. As it looks ahead, Québec is prioritizing a just and

5 Executive Summary ICAP Status Report 2023

equitable transition towards a green economy. In its article, Québec shows how its collab- European Union: In December, the EU Parliament and Council reached an agreement
oration with California has been fruitful, how it has channeled ETS revenues into further on a major reform of the EU ETS, strengthening its ambition in order to achieve the EU’s
climate action, and how the high share of renewables in its electricity grid have shielded it 55% emissions reduction target for 2030. The reform includes a tighter cap for the existing
from the worst impacts of the energy crisis. ETS for electricity, industry, and aviation and a phase-in of the maritime sector from 2024
onward. A phase-out of free allocation for some industrial sectors will be accompanied by a
In its article, Chile shows how carbon pricing policies can be tailored to specific contexts. The phase-in of a carbon border adjustment mechanism from 2026. Moreover, the EU decided
country has had a carbon tax in place since 2017. Starting in 2023, entities covered under the to introduce a new EU ETS for buildings, road transport, and process heat in industry in 2027
tax will be able to comply with their obligations using offsets stemming from sources not or, in case of high energy prices, in 2028.
regulated by the tax. This new system aims to promote mitigation in other sectors and develop
a domestic market for offsets. Looking ahead, under the banner of the framework law on Germany: 2022 marked the second year of operation of the German ETS. According to an
climate change, the Ministry of Energy is looking into establishing a system of GHG emission evaluation report published in November, the system has been successfully implemented.
caps, similar to a baseline-and-credit system for high-emitting sectors, as well as a cap-and- As of October, 1,700 regulated entities and 500 intermediaries had opened a registry account.
trade system for the power sector. Both instruments would support a cost-effective transition The first compliance period covering 2021 concluded in September, with a compliance rate
towards carbon neutrality. of 98% in terms of surrendered allowances.

The New Zealand Emissions Trading Scheme (NZ ETS) has been the country’s primary tool Kazakhstan: In July, a new National Allocation Plan for 2022-2025 was approved, estab-
to help reach its climate targets. In its article, New Zealand describes the role of its first lishing a cap of 163.7 MtCO2 for 2023.
Emissions Reduction Plan, which sets the course to net zero by 2050 and highlights emissions
pricing as a key instrument. The plan compiles a host of regulations and supporting policies Montenegro: The operation of the Montenegro ETS was negatively affected by several
that will help unlock new ideas, businesses, and markets to cost-effectively drive climate changes of government throughout 2022, which caused major delays in the adoption of
action. The article points to the importance of addressing the distributional impacts of the the annual allocation plan. The government set up a working group mid-year to review the
NZ ETS and weaving such considerations into the policy design itself. country’s climate legislation, including the ETS. This work is still ongoing as of January 2023,
with the adoption of the revised “ETS Decree” and “Climate Law” expected by April 2023.

YEAR IN REVIEW Sakhalin (Russia): In March, a “Federal Law on Conducting an Experiment to Limit GHG
Emissions in Selected Federal States of the Russian Federation” was approved in its final
Throughout 2022, ETSs across the globe have undergone a series of developments, reading, introducing mandatory emissions reporting and verification requirements for
including policy decisions spurred by rising prices caused by the energy crisis. New systems regulated entities in the Sakhalin region and obliging them to comply with the allocated
are also being introduced as jurisdictions work to design and implement ETSs. Below, emissions allowances. The law also sets a legal basis for “allowance circulation”. As a
we summarize major updates from the systems currently in force (i.e., those already in mandatory scheme to regulate GHG emissions, the Sakhalin pilot ETS was meant to
operation) and those under development (i.e., where a mandate for an ETS is in place, and launch in September but has been delayed pending cap-setting and allowance allocation
where system rules are currently being developed but not yet in force), as well as other processes.
jurisdictions which are considering an ETS.
Switzerland: A market stability mechanism was introduced in the Swiss ETS. Due to a large
EUROPE AND CENTRAL ASIA number of allowances in circulation, the auction volume was reduced by 50%. A revision of
the “CO2 Act” that covers the period 2025-2030 is in process.
Austria: Austria’s national ETS began operation in October. Originally set to begin in July,
the system was suspended for three months as part of the Austrian government’s energy Türkiye: Türkiye held its first Climate Council meeting with participation by public and
price relief plan. By its launch in October, regulated entities had to open a registration private institutions and NGOs. The Council’s recommendations included the launch of a
account on the dedicated platform. Late registration was possible without penalty until 1 pilot ETS in 2024 to align the development of a national ETS with the country’s 2053 net
February 2023. zero target. These recommendations were reflected in Türkiye’s Medium-Term Program for
2023-2025 and, following approval from the president, published in the Official Gazette.

6 Executive Summary ICAP Status Report 2023

Ukraine: The design process of the Ukrainian ETS has been severely impacted by the Russian cover industrial units, regardless of grid connectivity, and emissions from biomass/biofuel.
war of aggression, making it impossible to finalize the draft instruments for cap-setting and Consideration of the RGGI rule by North Carolina’s Environmental Management Commission
allowance allocation developed during the year. A stakeholder engagement process was has been delayed to 2023.
nevertheless carried out and finalized in early 2023.
Nova Scotia: In 2023, the province’s cap-and-trade system is being replaced by an output-
United Kingdom: The UK launched a major consultation on scheme reforms addressing based pricing system (OBPS), approved by the federal government in November. The
several issues, including how to align the cap trajectory with the country’s net zero target cap-and-trade system will be phased out after the 2022 compliance deadline in December
and expanding the scheme’s sectoral coverage. An initial response with changes to be imple- 2023, with two more auctions scheduled during the year to allow entities to purchase allow-
mented from 2023 was published in August, while the full response is expected in 2023. ances for their verified 2022 emissions.

NORTH AMERICA Oregon: In March, Oregon’s Department of Environmental Quality (DEQ) distributed allow-
ances to the 18 covered fuel suppliers currently subject to the emissions cap under the
California: In December, the Board of the California Air Resources Board (CARB) adopted Climate Protection Program. The distribution of allowances was based on the program
the state’s "Final 2022 Scoping Plan", which establishes the strategy to meet California’s rules for the first compliance period, which began in 2022 and includes calendar years 2023
emissions reduction targets. In light of the additional emissions reductions now expected and 2024. In September, DEQ launched a voluntary trading platform and the forms needed
by 2030, CARB announced it would review all major programs, including the state’s Cap-and- for trading between transferring and acquiring covered fuel suppliers.
Trade system. CARB will report to the state legislature on any potential program changes by
the end of 2023. Pennsylvania: In April, the final regulation to establish an ETS in Pennsylvania and to
participate in RGGI was published. The regulation is currently being challenged by several
Canada Federal: All Canadian provinces and territories had to hand in proposals for carbon lawsuits. Until legal proceedings are concluded, the Pennsylvania Department of Environ-
pricing systems for the 2023-2030 period. These must meet the strengthened federal mental Protection will not take steps to implement or enforce the RGGI regulation.
benchmark criteria of CAD 65 (USD 50) per tonne of CO2 equivalent in 2023, increasing
by CAD 15 per year to CAD 170/tCO2e in 2030. In November, the Canadian government Québec: In September, Québec adopted a new approach for free allocation, which will
announced which proposals had been approved and where the federal carbon pollution apply from 2024. Without reform, freely allocated allowances were forecast to represent
pricing “backstop” system would apply from 2023. an increasing share of the total cap, as industrial output grew. It is expected that the new
approach will see a reduction of free allocation of 2.9 million allowances between 2024-2030.
Massachusetts: As a result of the review of the “310 CMR 7.74” regulation which concluded
at the end of 2021, the Massachusetts Department of Environmental Protection started Regional Greenhouse Gas Initiative: RGGI states are currently conducting the Third
auctioning future vintage allowances in June and September. In each of the auctions, Program Review. As per the timeline for the program review released in November, an
MassDEP offered almost 400,000 2023 vintage allowances, equivalent to 5% of the 2023 cap. updated draft Model Rule would be released in fall 2023, with the program review concluding
in December 2023.
New York State: In January 2023, New York’s Climate Action Council issued a "Final 2022
Scoping Plan" that proposes a range of policies and actions to meet the State's carbon Washington: Following a year of intensive preparations, Washington state’s new cap-and-
neutrality goal in 2050 – including an economy-wide cap-and-invest program. When invest program started operating in January 2023. The system’s design closely resembles
adopted, the program will cover all emitting sectors under an enforceable and declining cap, that of California’s program. Washington began a public process to explore the possibility of
with the caps for 2030 and 2050 corresponding to state-wide emission limits. The Governor linking to other cap-and-trade systems.
has directed the Department of Environmental Conservation and the New York State Energy
Research and Development Authority to develop ETS regulations before January 2024. LATIN AMERICA AND THE CARIBBEAN

North Carolina: In an Environmental Management Commission Air Quality Committee Chile: The government published its 2022-2026 Energy Agenda in August. It states that a pilot
meeting in July, North Carolina’s Department of Environmental Quality provided infor- ETS project for the energy sector will be developed to evaluate the role of this instrument in
mation on how a proposed regulation to become a participating state in RGGI deviates achieving emissions reductions and a just transition in a cost-effective manner.
from the existing RGGI Model Rule. Among others, the North Carolina regulation would

7 Executive Summary ICAP Status Report 2023

Colombia: The “Climate Action Law” (Ley de Acción Climática), which came into force mandatory, intensity-based ETS for the power sector, initially set to begin in 2022, would
in December 2021, sets a goal to fully implement an ETS by 2030. This law also appoints launch in February and cover 99 coal-fired power plants.
an independent group of experts to generate recommendations to promote and develop
carbon markets in Colombia. These recommendations are to be considered by the Japan: In February, the government announced the upcoming Green Transformation
environment and finance ministries. (GX) League, a baseline-and-credit system for companies expected to become fully opera-
tional in April 2023. This will build upon existing carbon trading systems such as the JCM
Mexico: The operational phase of the Mexican ETS began in January 2022. The Ministry of and J-Credit scheme. Although participation in the GX League is voluntary, compliance is
Environment and Natural Resources is expected to publish regulations for the operational mandatory once formally a participant. The government is currently working on the rules
phase of the ETS in the first half of 2023. for the GX League, which will become fully operational in April 2023. In February 2023, the
Cabinet passed the basic GX plan, a 10-year roadmap which includes initial arrangements
AFRICA for a mandatory national ETS from 2026.

Nigeria: In August, the Nigerian Minister of the Environment announced that the country Malaysia: The Ministry of Natural Resources, Environment, and Climate Change will
has started activities towards establishing a national ETS. The National Council for Climate conduct a study under the 12th Malaysia Plan to develop a policy and design framework
Change, established in November 2021, is responsible for developing the system. Key design for the domestic ETS. The study is looking into ETS market design frameworks, registration,
elements such as the timeline and sectoral scope remain to be decided. The proposal will and alignment with international standards and is expected to commence in 2023.
go through stakeholder engagement before decisions are made on features such as the
allocation framework. New Zealand: After the major reforms of previous years, the New Zealand government
continued to make incremental improvements to the operation of the NZ ETS. Changes
ASIA-PACIFIC coming into effect for the forestry sector in 2023 include a shift to averaging accounting and
a new “permanent forest” category. Decisions were also taken to tighten the eligibility and
China: With the experience from the first compliance period, the Ministry of Ecology and accounting rules for industrial allocation. Consultations continue on an improved market
Environment updated MRV guidelines in March, with the aim of improving data quality. In governance framework, as well as a carbon pricing mechanism for biological emissions
November, the Ministry released draft allocation plans for 2021 and 2022 for public consul- from agriculture.
tation, significantly tightening benchmark values for coal-fired power plants.
Republic of Korea: In November, the government announced several near-term changes to
Chinese Pilots: All Chinese regional pilots continued trading and compliance. Besides the K-ETS. These include: increasing incentives to reduce emissions and facilitate low-carbon
regular activities, Beijing, Chongqing, Guangdong, Shanghai, Shenzhen, and Tianjin investment by issuing more free allowances to the most efficient covered entities; encour-
released or updated their Tan Pu Hui offsets framework to incentivize individual or small- aging trading and mitigating price volatility by opening up the ETS to more financial firms
scale GHG reduction projects. Credits generated from these projects will be used for and increasing the allowance holding limit; facilitating the conversion of international
compliance purposes in these pilots. offset credits to Korean Credit Units; strengthening MRV; and increasing support for small
businesses and new entrants.
India: The Indian government took steps towards the establishment of a national carbon
market. A draft blueprint by the Bureau of Energy Efficiency proposes a phased intro- Thailand: The Thailand Voluntary ETS (T-VETS) pilot project was extended to the Eastern
duction involving two mechanisms: a voluntary market supported by a domestic project- Economic Corridor area, a key industrial region of Thailand. Early in the year, the government
based offset scheme and a compliance market with mandatory participation for regulated also published rules and guidelines for carbon credit trading, which were followed in
entities. The voluntary market is expected to enter into force by July 2023, followed by the September by the launch of the carbon credit trading platform FTIX.
compliance market.
Vietnam: In July, Vietnam issued a Decision by which the country commits to achieving
Indonesia: In October, the Ministry of Environment and Forestry released implementing net zero GHG emissions by 2050, with a mid-term target of 43.5% below BAU levels by 2030.
regulations for the upcoming national ETS, with details on offsets, sectoral roadmaps, MRV This decision follows “Decree 06/2022/ND-CP”, which outlines a roadmap for the imple-
procedures, and institutional arrangements. Sectoral regulations are currently under devel- mentation of an ETS with a declining cap corresponding to Vietnam’s NDC. The pilot ETS is
opment. In January 2023, the Ministry of Energy and Mineral Resources announced that the expected to start in 2026 and become fully operational by 2028.

8 Executive Summary ICAP Status Report 2023

FROM LOCAL TO SUPRANATIONAL
EMISSIONS TRADING SYSTEMS OPERATE AT EVERY LEVEL OF GOVERNMENT

This infographic demonstrates the diversity and complexity that exists with respect to the level of government at which emissions trading can
be implemented. At one end of the spectrum, city-level ETSs are in operation, for example, in Shenzhen and Tokyo. At the other end, the EU ETS
operates supranationally in all EU Member States plus Iceland, Liechtenstein, and Norway. Multiple ETSs may be in force in countries like Germany
and Austria, where some emissions are covered by the EU ETS and others by the German or the Austrian National ETS. Similarly, the China National
ETS currently covers power sector emissions while other province- and city-level ETS pilots regulate emissions from a variety of sectors. In North
America, many provincial or state-level ETSs exist, with some linked domestically or internationally. In the rest of ICAP Status Report 2023 you can
find a wealth of information about these individual systems that are already in force as well as many others that are under development or consid-
eration.

6 Cities 20 Provinces & States 10 Countries 1 Supranational

Beijing* California New Jersey Austria EU Member States
Chongqing* Connecticut New York China + Iceland
Shanghai* Delaware Nova Scotia Germany + Liechtenstein
Shenzhen Fujian Oregon Kazakhstan + Norway
Tianjin* Guangdong Québec Mexico
Tokyo Hubei Rhode Island Montenegro
Maine Saitama Prefecture New Zealand
Maryland Vermont Republic of Korea
Massachusetts Virginia Switzerland
New Hampshire Washington United Kingdom

* Beijing, Chongqing, Shanghai and Tianjin are provincial-level municipalities in the Chinese administrative system.

9 From Local to Supranational ICAP Status Report 2023

 55%
JURISDICTIONS MAKING UP

1 OF GLOBAL GDP ARE USING EMISSIONS TRADING

3 17 %
ALMOST 1/3 OF THE GLOBAL POPULATION
LIVES UNDER AN ETS IN FORCE

OF GLOBAL GHG EMISSIONS ARE COVERED BY AN ETS

10 From Local to Supranational ICAP Status Report 2023

 EMISSIONS TRADING WORLDWIDE
THE CURRENT STATE OF PLAY IN CAP-AND-TRADE
The ICAP ETS world map depicts emissions trading systems currently in force, under development or under consideration. As of January 2023,
there are 28 ETSs in force. Another eight are under development and expected to be in operation in the next few years. These include ETSs in
Colombia, Indonesia, and Vietnam. Twelve jurisdictions are also considering the role an ETS can play in their climate change policy mix, including
the first African jurisdiction depicted in the map: Nigeria. If a jurisdiction has multiple systems in force, it is depicted in blue, with the borders of
the jurisdiction representing the layered systems (e.g. Germany and Guangdong). If, however, it has a system in force but is also developing an
additional system, it is depicted in blue but also features a green border (e.g. the EU).

Regional Greenhouse Gas Initiative (RGGI)

• Connecticut Québec
• Delaware Cap-and-Trade System German National ETS
• Maine Austrian National ETS
• Maryland
• Massachusetts UK ETS
• New Hampshire Nova Scotia
• New Jersey Cap-and-Trade China National ETS
• New York Program
• Rhode Island
• Vermont Kazakhstan ETS
• Virginia Ukraine
Sakhalin (Russia)
Washington Cap-and-Invest
Massachusetts Limits
Oregon Climate Protection Program on Emissions from Japan
Pennsylvania
Electricity Generation Türkiye
Saitama ETS
California Cap-and-Trade Program New York State Pakistan Tokyo Cap-and-Trade Program
New York City Montenegro ETS Republic of Korea ETS
North Carolina Switzerland ETS Taiwan (China)
India Vietnam
Mexican ETS
Nigeria Thailand
Chinese
Colombia Pilots Malaysia
EU ETS • Beijing
Brazil • EU Member States • Chongqing
Indonesia
• Iceland • Fujian
• Liechtenstein • Guangdong
• Norway • Hubei
In force (28) • Shanghai
EU ETS 2 • Shenzhen
Under development (8) • Tianjin
Chile
Under consideration (12)
New Zealand ETS

11 Emissions Trading Worldwide ICAP Status Report 2023

 + China National ETS* + Germany + UK**

+ Austria + Montenegro + Washington

GLOBAL EXPANSION OF ETS

– Ontario + China National ETS

THE SHARE OF GLOBAL GHG EMISSIONS UNDER AN ETS
TRIPLED SINCE 2005

+ Nova Scotia

+ Mexico

+ Oregon
MtCO2e

The graphic depicts the worldwide growth of emissions trading over

9,000
time. 2023 has seen the start of new systems in Austria, Montenegro and
Washington. The share of global GHG emissions covered by emissions
17%
of global GHG
trading is over 17%, more than triple the amount than when the EU ETS
emissions
was launched in 2005. Changes over time are driven by the addition
of new sectors and systems, as well as by the counteracting trends of

+ Chongqing + Hubei (as new Chinese Pilots)

declining caps in many systems and growing global emissions. See

+ Fujian (as a new Chinese Pilot)

“Notes on Methods and Sources” for further details.

+ Switzerland + California + Québec +

+ Republic of Korea
Kazakhstan + Chinese Pilots*
6,000

+ Ontario
5%
of global GHG
emissions
+ New Zealand

+ Saitama
+ Tokyo

3,000
+ RGGI*
+ EU ETS

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
* RGGI includes New Jersey (as of * Beijing, Guangdong, Shanghai, *T
 he Chinese National ETS came into force in 2021 but has retroactive
2020) and Virginia (as of 2021). Shenzhen, Tianjin compliance obligations in 2019 and 2020, indicated above by the
striped bar
** I n 2021, the UK launched its own ETS which required an adjustment
in the EU ETS cap.

12 Global Expansion of ETS ICAP Status Report 2023

SECTOR COVERAGE
SECTORS COVERED BY EMISSIONS TRADING ACROSS SYSTEMS

The graphic shows sectors (types of economic activity) covered Emission

by an ETS in force in 2023. Systems are listed clockwise alpha- coverage
betically, with the numbers in the outermost ring indicating the 70 %
share of aggregate emissions covered by the system as per the 75

NATI USTRIAN
% %

WAS

S
most recent available data. Upstream coverage in a sector is 26

L ET
indicated with an arrow. Sectors are considered covered when

HIN

ONA

&T
UN S
at least some entities in the sector have explicit compliance

A
ET

AC
GTO
ITE

44
obligations. Typically, not all facilities in the sector are regulated

NI
%

DK

NC

OR

%
Agriculture TO A

37
because of limits like inclusion thresholds. In addition, not all IN

IN
SA KYO CH ETS

LIF
&I
GD
gases or processes of a given sector may be covered. The jurisdic- ITA C AL

CA
MA &T

OM
tions’ respective factsheets provide more information on system ON
Forestry ET & TI
NA

39 %
coverage. The graphic includes only sectors which are covered by S

12 %
E
NES
at least one ETS. See “Notes on Methods and Sources” for further SWI
TZE CHI LOTS
details. Waste R LAN PI
D ET
S E
D
Domestic

38 %
C
B

14 %
Aviation
RGGI
A
EU ETS

Transport
F GERM
BLIC O NATIO AN
REPU ETS NAL ET

38 %
A S
KORE
Buildings

74 %
KA

M
ZA

AS
K HS
&T

SA
C TA
N

CH
Industry
EC ET
ÉB S

US
QU

ET E

%
TS M
P

47
77

&T
CP

LI ISS
Power

LAND ETS

M IO
MONTEN
%

C
ON

IT N
TIA

S
The Fujian ETS covers the electricity grid

ME
A

EG

ON S
B Beijing, Chongqing, Fujian, Guangdong, Hubei, Shanghai, Shenzhen, Tianjin

XIC
SCO
OR
C Beijing, Shanghai 45
8%

AN
EGRO ET
%

NEW ZEA
VA
D Beijing, Shanghai, Shenzhen

ETS
NO
E Fujian, Guangdong, Shanghai

87 %

S
indicates which sector is covered upstream % 40
49 %

13 Sector Coverage ICAP Status Report 2023

DIFFERENT SHAPES OF ETS
A COMPARATIVE LOOK AT KEY METRICS IN SELECTED SYSTEMS

Each of the graphs below presents a different metric across ETSs in force. Coverage shows the share of the jurisdiction's GHG emissions covered
under the ETS. Allowance price is measured in USD per metric tonne of CO2e and averaged over 2022. Auction share, expressed as a share of the
2022 cap, denotes the share of allowances that were auctioned and generated revenues for the jurisdiction’s government. Offset use indicates the
share of a compliance entity’s obligations that can be met using approved offsets. See “Notes on Methods and Sources” for further details.

Coverage Allowance price

0-100% in USD
8%

83
70% WA

NA WASH

EU ETS $
EU ETS 3

81
NA

$32
2%

S$
S1
AU

SHINGTO

AU

ET
INGTON
ET
ST

ST
45 % NA $1

ND
R

% 47
ND

R
S
IA

OR
OR ET

IA

LA
S
ET
LA

EG
ET

EG AN

ET

ER
ON
N C&I

ER

N
S

ON ST

C&I
TA

ITZ
CP
ITZ

H
CP HS P K
$28

SW
26% P K 5% ZA
SW

T7 $93
UK ZA & UK KA C &T
ETS KA IA C ETS NIA
RN R
IFO IFO
CAL CAL

38% GERMANY ETS QUÉBEC C&T 77% $32 GERMANY ETS QUÉBEC C&T $28

ETS RGGI 1 ETS RGGI $

EXICO MA 4% XICO MA 13
40% M SS
AC $0 ME SS
H AC
US HUS

REPUBLIC OF KOREA ETS $18

TS E
REPUBLIC OF KOREA ETS 74%

TT TS E
NO

NO
SE TT
NA AE SE
NEW

VA

I TS

NEW

VA
CH N
8 HI TS
S

%
S

% C $

S
ET

S
CO

44 $8 8

CO
ET
ZEA

ZEA
MA

TI

TI
MA
AC
T

AC
ITA

LAN
&

LAN
ITA
&T

O C&
YO C

&T
SA

SA
87
D ET

$2
%

D ET
%

$1
20

TOK

7
OKY
S 49

S $4
$5 T
17%

8
14 Different Shapes of ETS ICAP Status Report 2023
 Auction share Offset use
0-100% 0-20%

NA WASH

8% WAS
7%

%
EU ETS 0
EU ETS 5

%
3%
100

0%

0
D1

TS
%A

HINGTO
AU
INGTON

DE
AN
0%

ST
US

NA 10 %
%

AN
L
OR 00

R
S
TR

ER
OR

IA
EG ET 1

L
**
IA

EG

ITZ

N C&I*

ER
ET
ON N TS
TA
C&I

ON
ET

ITZ
SW
CP H S CP N
S

P K TA

SW
54% ZA 38% 0% P S 4%
UK &T UK H &T
ETS KA C ETS K
NIA
C
R NIA AZA R
FO K IFO
CAL
I CAL

100% GERMANY ETS QUÉBEC C&T 59% 0% GERMANY ETS QUÉBEC C&T 8%

MA ETS
ETS SS RGGI 9 EXICO
MA RGGI 3
EXICO AC 3%
10% M SS .3%
0% M H AC
US H US

REPUBLIC OF KOREA ETS 5%

REPUBLIC OF KOREA ETS 4%

E TT E
TS SE TS TT
NO

E AE SE

NO
NA TS
NEW

N
VA

HI 1 HI TS

NEW

VA
C 00 C 0
S

% %
TS

TS
0% 5%

S
CO

CO
ZEA
AE

AE
TI

ZEA

TI
AC
M

M
T

AC
LAN
TA

ITA
O C&

O C&

LAN
&T

&T
I
SA

SA
D

18

NA
D ET
OKY
NA

OKY
NA
ETS

S 0%
NA T

NA T
56%

* Up to 5% from projects not located on federally recognized tribal land, plus an additional 3% from projects located on federally recognized tribal land
** The Kazakhstan ETS is represented out of scale in this infographic.

Coverage Auction share

Percentage of jurisdiction‘s emissions covered under the Proportion of allowances that is not allocated for free, but
system (in %). must be acquired either at auction or otherwise (in %).

Allowance price Offset use

The weighted average price for allowances across 2022, for one Share of compliance obligation that can be met using
metric tonne of CO2e emissions (in USD). approved offsets.

15 Different Shapes of ETS ICAP Status Report 2023

 ALLOWANCE PRICES AND REVENUES
2022 IN A LONGER HISTORICAL CONTEXT

The upper panels of this infographic use data from the ICAP Allowance Price Explorer to visualize developments in allowance markets in a long
historical context since 2008 (left panel) and in 2022 (right panel). Both the short- and long-term price developments are driven by changes in
current and expected future scarcity of allowances, due to variations in general economic conditions, revisions to the rules of the systems (including
those governing offsets and market stability mechanisms), and interactions with other climate and energy policies. The shaded areas indicate the
range of prices observed in the Chinese pilot ETSs. The panel on the next page displays information on revenues raised by governments at auctions
of allowances over time. The amount of revenue collected depends on the jurisdiction’s size, ETS coverage, share of auctioned allowances and
allowance prices. Over time, increases in allowance prices and the introduction of new systems has led to an increase in revenues raised from the
auction of allowances. In all panels, observations in non-USD currencies are converted to USD using exchange rate data from the IMF. See “Notes on
Methods and Sources” for further details.

2008-2022 2022
120
USD

100

80 EU ETS
UK*

60

New Zealand

40
Germany*
California /Québec*
Nova Scotia*
20 RGGI*
Republic of Korea
China
Chinese Pilots
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Jan 22 Feb 22 Mar 22 Apr 22 May 22 June 22 July 22 Aug 22 Sept 22 Oct 22 Nov 22 Dec 22 * Primary market data

16 Allowance Prices and Revenues ICAP Status Report 2023

 YEARLY REVENUES RAISED BY EACH SYSTEM

70,000
Yearly total in million USD

+ Germany I + UK

+ Austria
Republic of Korea (USD 245.4 million)
Québec (USD 1,028 million)
Over Chinese Pilots, Massachusetts, Nova Scotia and Switzerland (USD 205.8 million)
60,000
USD 224 billion
in raised revenues
Germany (USD 6,743 million)
since 2008

50,000
2022 UK (USD 7,561 million)

RGGI (USD 1,194 million)

New Zealand (USD 1,288 million)
40,000
California (USD 4,027 million)
Over
Austria (USD 263 million)
USD 63 billion
in raised revenues EU ETS (USD 40,816 million)
in 2022

+ Nova Scotia
+ Republic of Korea
30,000

+ Massachusetts
+ Québec I + Chinese Pilots

20,000
+ California I + EU ETS

+ Switzerland

10,000
+ New Zealand
RGGI

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

17 Allowance Prices and Revenues ICAP Status Report 2023

CONSUMER, ENERGY AND ALLOWANCE PRICES
IN 2021 AND 2022
Allowance price
150 increases seen in 2021
EU member states1 Germany Switzerland
have not continued at
125 the same rate in 2022.

100

75

50
Energy prices rose
API for German national ETS
25
significantly in 2022,
Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct particularly in the first
21 21 21 21 22 22 22 22 21 21 21 21 22 22 22 22 21 21 21 21 22 22 22 22
half of the year, while
allowance prices were
broadly stable in most
150 jurisdictions.
California2 RGGI states3 Consumer Price Index (CPI)
125 Energy component of CPI
Allowance Price Index (API)
100

75
This infographic takes a look at the evolution of the consumer price index (CPI), its energy
50
component and the allowance price index in seven jurisdictions before and after the start of the war
25 in Ukraine in early 2022. In each panel, the blue line is the CPI in the jurisdiction, including prices
Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct
21 21 21 21 22 22 22 22 21 21 21 21 22 22 22 22 of food and energy. The orange line depicts the energy component of the CPI. The allowance price
index is shown using a green line with a marker. It corresponds to the monthly average prices in
domestic currency of allowances in the secondary market except in the case of California, where
150 the clearing prices from the primary market are shown. For Switzerland and Germany, the EU ETS
UK Republic of Korea
125
allowance prices are used and the panel for Germany additionally displays the prices of allowances
in the national ETS in light blue. All indexes have been rebased to equal 100 in January 2022 so
100 the corresponding values on vertical axis can be interpreted as percent change relative to the base
period. All panels share the same vertical and horizontal axes to aid comparison of price changes in
75
different jurisdictions. See “Notes on Methods and Sources” for further details.
50

25
Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct Jan Apr July Oct
21 21 21 21 22 22 22 22 21 21 21 21 22 22 22 22

1 CPI and and energy component of CPI correspond to values for the EU 27 member states.
2 CPI and the energy component of CPI in California correspond to values in the West urban region.
3 CPI and the energy component of CPI in RGGI states correspond to values in the Northeast urban region.

18 Consumer, Energy and Allowance Prices in 2021 and 2022 ICAP Status Report 2023
PRICES OF COVERED EMISSIONS
This infographic shows the range of allowance prices in 2022 in ETSs in force, and the volume of emissions that ETS with those price levels cover.
Most ETS-covered emissions are in systems where average prices were below USD 10 in 2022. About one sixth of ETS-covered emissions were in
systems where average prices in 2022 were between USD 10 and USD 50. There was no system where prices were in USD 50 to USD 70 range, while
the EU, Swiss and UK ETSs featured average prices over USD 70. Over one fifth of ETS-covered emissions are in systems where the 2022 average
allowance price was above USD 70. Differences in allowance prices are driven by, among others, changes in current and expected future scarcity of
allowances in each system, variations in general economic conditions, system design and policy reforms.

> USD 70

70
Average allowance price in 2022 (USD)

50

≥ USD 30 and < USD 50

30

≥ USD 10 and < USD 30

10

< USD 10
0
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

Emissions coverage/cap (MtCO2e)

19 Prices of Covered Emissions ICAP Status Report 2023

ETS IN PERSPECTIVE
This infographic depicts each ETS as a circle. It provides a look at the diversity of ETSs in force across
100
Average price for allowances in 2022, in USD

three different dimensions: The x-axis shows the percentage of the corresponding jurisdiction’s
United Kingdom
aggregate emissions that are covered by each system. The y-axis shows the average allowance price
in 2022 measured in USD per tCO2e. Finally, the size of the bubble corresponds to the cap or the
EU ETS
coverage of the system in MtCO2e.

Switzerland
80

Size of the bubble:

Cap or coverage of the system in MtCO2e

60

New Zealand

40
Germany

California
Nova Scotia

Québec
China
20 Republic of Korea

RGGI

Massachusetts

Tokyo

Saitama
Kazakhstan
0
20 40 60 80 100
Mexico Percentage of jurisdiction‘s emissions covered under the system (in %).

20 ETS in Perspective ICAP Status Report 2023

ABOUT
THE INTERNATIONAL CARBON ACTION
PARTNERSHIP Knowledge
Founded in 2007, the International Carbon Action Partnership (ICAP) brings together policy- Sharing
makers from all levels of government that are operating an emissions trading system (ETS)
or are taking steps to introduce one. ICAP provides a unique platform for governments to
share their practical experiences of emissions trading and the latest ETS knowledge. ICAP
membership currently counts 33 members and 7 observers. ICAP celebrated its 15-year
anniversary in October 2022.

ICAP’S OBJECTIVES Capacity Technical

• Highlight emissions trading as a key policy tool to address climate change.
Building Dialog
• Facilitate the development, implementation, and refinement of ETSs around the world.
• Build and strengthen partnerships amongst governments to share best practices and lessons
learned.

MEMBERS (AS OF MARCH 2023)

Arizona, Australia, British Columbia, California, Denmark, the European Commission, OBSERVERS
France, Germany, Greece, Ireland, Italy, Maine, Manitoba, Maryland, Massachusetts, the
Netherlands, New Jersey, New Mexico, New York, New Zealand, Norway, Nova Scotia, Japan, Canada, Kazakhstan, the Republic of Korea, Mexico, Singapore, and Ukraine
Ontario, Oregon, Portugal, Québec, Spain, Sweden, Switzerland, the Tokyo Metropolitan
Government, Vermont, the United Kingdom, and the State of Washington
THREE PILLARS OF ICAP’S WORK
Technical Dialog: ICAP provides a platform for its Members and Observers to exchange
knowledge on and discuss ETS design and implementation. This workstream focuses on
key aspects of emissions trading, drawing on the rich experience of ICAP jurisdictions and
facilitating dialog on ETS issues among experts and others interested in carbon markets.

Knowledge Sharing: ICAP acts as a unique repository of information on emissions trading,

ICAP MEMBERS AND promoting it as an important policy instrument to address climate change. ICAP is the main
knowledge hub for those who want to learn more about emissions trading and access infor-

OBSERVERS mation about the latest ETS developments worldwide.

Capacity Building: ICAP builds capacity on the design, implementation, and operation of
ETSs around the world by offering training courses to policymakers and other stakeholders
on all aspects of emissions trading. Almost 1,000 participants from over 70 countries have
participated in these courses over the years.

21 About ICAP Status Report 2023

THE STORY OF ICAP
HOW ICAP BEGAN: THE INITIAL YEARS

The International Carbon Action Partnership was born in 2007, with a view to help foster cooperation on international
climate change issues and related foreign policy. A group of governments quickly got behind the idea and a political
declaration was signed among founding members in Lisbon in the same year.

ICAP quickly began to garner attention and soon welcomed additional memberships from governments around the world.
ICAP’s first steps were taken in the Kyoto era – where linking seemed a conceivable way to build a global carbon market
“under the Kyoto cap” and where an organization like ICAP could facilitate and accelerate this effort. For this reason,
ICAP’s Technical Dialog work began with a particular focus on any and every technical aspect of ETS that might facilitate
alignment among systems and future linkages, such as MRV, allocation, scope, and coverage.

In this period, ICAP engaged with jurisdictions in the Asia-Pacific region – notably from South Korea, Australia, New Zealand,
Kazakhstan, China, and national and subnational systems in Japan. Early dialog with these regional frontrunners at the
time was an important signal of true international cooperation and laid the foundations for the diverse set of members
and observers that make up ICAP today.

Since 2009, Capacity Building and outreach on the fundamental features of ETS have been a core workstream for ICAP. The
first editions of the ETS Summer Academy – an initiative that continues to this day – also took place that year. It is now one
of ICAP’s most coveted capacity building courses and over time has helped foster a global community of ETS practitioners:
the ICAP alumni. After 2011, Technical Dialog and Knowledge Sharing beyond ICAP’s membership became increasingly
important. An initial version of ICAP’s ETS Map that visualizes up-to-date information on global ETSs was launched in 2012. ETS Map
Today, it is an interactive tool that features downloadable factsheets and granular information on all existing ETSs. This
first knowledge product provided an important basis to later expand ICAP’s role as a unique repository of information on
emissions trading. All publications, ETS news, events, and other materials are available on the ICAP website.

NEXT: AN ERA OF GROWTH

In 2013-2020, ICAP grew and changed significantly, along with the number of ETSs worldwide. More systems sprang up
and existing systems leapt forward, implementing reforms, and deepening their markets. Discussions and exchange on
the technical elements of ETS became much more tangible, as theory turned to practice, and systems went from design
to implementation. ICAP’s Technical Dialog workstream thus grew in prominence and is now made up of workshops,
webinars, and reports.

At the same time, there arose an appetite for ETS in emerging economies. This brought with it new questions, such as how
an ETS might work in jurisdictions with a regulated power sector. The realization of the practical challenges of linking,
with system designs strongly rooted in domestic economy considerations, also meant that previous hopes of transatlantic
linking and the construction of a single, global carbon market became less feasible.
Allowance Price Explorer

22 The Story of ICAP ICAP Status Report 2023

But global cooperation and exchange remained all the more relevant in a world where models of ETS implementation –
with view to scope, allocation, and cap-setting – varied significantly from continent to continent. Renewed vigor around
the potential of emissions trading as a key instrument to tackle climate change meant that those in the field relished
the opportunity to learn from their peers. ICAP’s Capacity Building programs and training courses also began to reflect
the accumulation of practical experiences. ICAP responded to the growing need not just for conveying ETS basics but
for opening a channel for seasoned ETS practitioners to pass on their knowledge to a new generation of ETS designers
working to launch systems in the Global South. The ICAP alumni from these training courses, both in person and virtual, EMISSIONS
now comprise almost 1,000 practitioners from over 70 countries – keeping in touch, working together, and exchanging TRADING
IN PRACTICE:
when they meet at international climate events. A Handbook on Design
and Implementation
SECOND
EDITION

ICAP’s role as an ETS knowledge hub also began to evolve in this time. In 2014, the first edition of the annual Emissions
Trading Worldwide Status Report was published. This has become a critical market resource and our flagship publication.
In 2015, together with the World Bank’s Partnership for Market Readiness, ICAP brought together practical lessons on ETS
design and implementation in an ETS Handbook, sparked by demand from policymakers. Our series of ETS Briefs was also
initiated in 2015 and provide simple, up-to-date explainers on the basics of emissions trading. We also expanded our ETS
News reporting in this time, and in 2019 launched our Allowance Price Explorer.

To this day, ICAP remains a safe and neutral forum for governments to openly exchange on ETS design and engage in
advanced Technical Dialog. ICAP continues to forge collaborations with other carbon pricing initiatives around the world.

THE CURRENT ERA AND A VIEW AHEAD

Now, 15 years since ICAP’s inception, we find ourselves once again at a crossroads. Established systems from the last decade
are maturing. They are largely stable and reliable, and have shown resilience to financial crises, a pandemic, and now a global
energy crisis. At the same time, new systems are coming online, especially in the Latin American and Asia-Pacific regions.

The objectives of policymakers have shifted towards aligning these policy instruments with long-term, ambitious climate
targets. We look towards the future and ask such questions as: how will ETS work in a net zero scenario? What role will
removals play? Other important topics include dialogs on competitiveness and carbon leakage, emissions trading and
international cooperation, offsetting, and ETS and Article 6.

The EU’s plans for a carbon border adjustment mechanism also provides a sharp impetus for ETS and other carbon
pricing instruments, which have become more diverse. Among the jurisdictions currently considering an ETS, very few
are designing ‘traditional’ cap-and-trade like the first wave of systems. The next generation of ETSs, predominantly
implemented in developing countries, will feature alternative design elements or will be a hybrid of various mechanisms.
These will need to be carefully crafted to be able to help jurisdictions meet objectives in their own unique situations. The
world is increasingly complex, and emissions trading is flexible enough to meet this complexity. Looking ahead, ICAP will
continue to delve into these dynamic topics to affirm the role of ETSs in achieving net zero emissions.

The ICAP Secretariat is deeply committed to its mission to help governments across the globe engage with each other and
create robust and effective ETSs that can spur us along the road to climate neutrality. We want to thank all the members,
observers, partner organizations, and individuals that have supported ICAP’s work over the last 15 years – we truly look
forward to the next 15.

23 The Story of ICAP ICAP Status Report 2023

15 YEARS of
ICAP 40 MEMBERS
& OBSERVERS
22 Countries
16 Provinces and States
1 Union
1 City

AROUND 1,000
PARTICIPANTS
27 TRAINING
COURSES
to ICAP capacity building activities
 7 0
2 EWSES
NRTICL
A 170
WE HAVE ORGANIZED...

15 COPS
ATTENDED

...EVENTS AND WEBINARS

2,200+

65
ER
W I T T E RS
T
O L LO W
F

N
K E D I RS
NEWSLETTER N
L I LO W E
SUBSCRIBERS PU FOL

4,700+ BLI
CAT
ION 6,000+
S
 International Carbon
Action Partnership

IMPRINT

Publication date
March 2023

Design
Simpelplus
www.simpelplus.de

Photos
Cover: Myriams-Fotos, Pixabay

Disclaimer
This report was prepared by the ICAP Secretariat. The findings and opinions expressed in this
report are the sole responsibility of the authors. They do not necessarily reflect the views of
ICAP or its members.

The data used in this report reflects the global state of play at the time of writing in January
2023. Although the information contained in the report was assembled with the utmost care,
updated and/or additional information may have been released by the time of printing. The
ICAP Secretariat cannot be held liable for the timeliness, correctness, or completeness of the
information provided. For any corrections, additions, or other comments on the content of
this report, including relevant citations, please contact the ICAP Secretariat at info@icapcar-
bonaction.com.
All queries on rights and permissions should be addressed to:
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International Carbon Action Partnership (ICAP) All rights reserved. The content of the work created by the ICAP Secretariat and the work itself
Köthener Strasse 2 are subject to German copyright law. Third party contributions are marked as such. Dupli-
10963 Berlin, Germany cation, revision, distribution, and any kind of use beyond the limits of copyright require the
written consent of the authors. The duplication of parts of the work is only permitted if the
[email protected] source is mentioned.

Attribution: Please cite the work as follows: ICAP (2023). Emissions Trading Worldwide:
Status Report 2023. Berlin: International Carbon Action Partnership.

www.icapcarbonaction.com