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“ AS CARBON MARKETS CONTINUE TO SPREAD AROUND THE WORLD, COUNTRIES CAN COOPERATE TO DO MORE TOGETHER BY FORMING INTERNATIONAL LINKAGES BETWEEN SYSTEMS ”and scale needed to hold the average global temperature increase to well below 2°C, as agreed in Paris. The sooner the rules are clearer, the sooner business can – well, get on with the business of fighting climate change. For business, linkages can make a real difference. By creating a level playing field, the harmonisation of policies and approaches can help avoid competitive distortions and reduce the risk of carbon leakage. More importantly, it also provides the opportunity to pursue reductions where they are cheapest, key to keeping costs down. Opportunities such as carbon capture and storage or forest-based sequestration are not spread evenly geographically – a globally-connected market allows everyone the same access to potential reductions.Make no mistake: these two process are complementary, and progress in one can aid progress in the other. The Paris Agreement provides a good foundation for the future, but the imperative lies with policymakers, both nationally and at the UN level. Carbon markets are key to unlocking the full potential of the Paris Agreement, and in realising the low-carbon world parties committed to in December 2015 – and are a crucial tool to involving the private sector in this transition. ■References1International Carbon Action Partnership, Emissions Trading Worldwide: Status Report 2016.2 IETA and EDF, Carbon Pricing: The Paris Agreement’s Key Ingredient, April 2016.ABOUT THE AUTHORDirk Forrister is President and CEO of the International Emissions Trading Association (IETA), a non-profit business association dedicated to market-based climate policies. Mr Forrister brings a long history of public and private sector engagement in market-based environmental policy. He spent a decade as Managing Director at Natsource LLC, the manager of one of the world’s largest carbon funds.Earlier in his career, he served as Chairman of the White House Climate Change Task Force under President Clinton and Assistant US Secretary of Energy for Congressional, Public and Intergovernmental Affairs.As a legislative counsel for Rep. Jim Cooper, he helped draft the US acid rain trading law in 1990.Carbon markets are enabled by article 6 of the Paris Agreement, which recognises that voluntary cooperation between parties to achieve their stated Nationally Determined Contributions (NDCs) allows “for higher ambition in their mitigation and adaptation actions and to promote sustainable development and environmental integrity”. The result of such cooperation could take the form of ‘‘internationally transferred mitigation outcomes’’, and will be subject to robust accounting to ensure that reductions are not counted twice. This is key to ensuring environmental integrity of such transfers. Article 6 also establishes a mechanism to help cut greenhouse gas emissions and support sustainable development, and is open to both the public and private sectors. Under this mechanism, countries will host as yet unspecified mitigation activities, with the resultant emission reductions used by another country to fulfil its NDC. This mechanism too will be subject to strict accounting rules to avoid the double-counting of reductions. Work on the precise rules for these options – including the accounting provisions – began in May 2016, and will continue in earnest. According the Agreement, these rules are to be adopted by the Conference of the Parties (COP) serving as the meeting of the Parties to the Paris Agreement. In other words, at the first COP following the entry into force of the Paris Agreement; this latter milestone is defined as the 30th day after at least 55 countries, accounting for at least 55 per cent of global greenhouse gas emissions, have deposited their instruments of ratification, agreement, approval or accession with the UN Depositary (article 21).ARTICLE 6 of the Paris AgreementFINANCE AND INVESTMENT 087