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MAKING THE MARKETSThe Paris Agreement is a success on many fronts – although a lot of hard work remains to turn it from words into action and to achieve the 2°C target to restrict the average global temperature increase. This is especially true with regards to carbon markets, provisions for which are captured by article 6 of the Agreement (see box).   The Agreement paves the way for international cooperative efforts and a new mechanism to mitigate greenhouse gas (GHG) emissions and support sustainable development, both underpinned by robust accounting provisions. The mechanism will be open to both public and private sector actors – a welcome move for the business community. In the run-up to the Paris talks last December, business leaders repeatedly called for carbon pricing mechanisms to stimulate investment in the low-carbon transition that the Agreement seeks. But before the private sector can pick up this baton, it needs governments to make the rules clear. Even for markets at a national level, or indeed subnational as we are increasingly seeing across North America, the onus is on policy-makers to set the frameworks for action. The provisions in article 6 of the Paris Agreement are a welcome invitation for those that want to join the existing 40 per cent of global GDP covered by an emissions trading system (ETS). This is an invitation some have already accepted, including China which plans to build on its seven pilot programmes and launch a national ETS next year. In a recent paper by IETA and Environmental Defense Fund, we analysed the 188 Intended Nationally Determined Contributions (INDCs), finding that 90 governments expressed an interest in using carbon markets to meet the emission reduction targets set out in their plans. Some even say they can cut emissions by even more than what is in their INDC, if they have access to international carbon markets and climate finance. What this means is that, going forward, INDCs have the potential to be the starting point for emission reduction ambitions – the floor for ambition, as it were. Indeed, given the immense public interest in the Paris deal and the hard work by all parties to get the agreement finalised, backtracking and weakening of goals will not be tolerated. What does this mean for governments?The first step is to make progress on the rules and guidance to enable the market provisions in article 6 of the Agreement to come to life – the sooner, the better. Investment in activities under the new mechanism need not wait until the Agreement comes into force. As we saw with the Clean Development Mechanism, projects began even before the Kyoto Protocol entered into force in 2005. Such early movement is important to building momentum, encouraging others to join in. Market mechanisms could be a lifeline for countries that are fully industrialised and face high carbon abatement costs, as well as for countries where the bulk of emissions are from sectors with limited abatement opportunities because of technology constraints. Well-designed carbon markets not only deliver a needed source of climate finance, but they also provide strong governance, transparency and accounting DIRK FORRISTER, PRESIDENT AND CEO, INTERNATIONAL EMISSIONS TRADING ASSOCIATION (IETA)Above:Dirk Forrister084 FINANCE AND INVESTMENT