ResearchPDF Available

Carbon 2013: At a Tipping Point

January 2013

DOI:10.13140/RG.2.2.31230.89929

Authors:

Emil Dimanchev

Norwegian University of Science and Technology

The 2013 edition of the Thomson Reuters annual survey of global carbon markets

Assessing the EU ETS

…

EU ETS and internal abatement "To what extent has the EU ETS caused your company to reduce its own emissions?" Questions asked to EU ETS compliance entities, N=178

…

Back-loading to the future "Do you think that backloading will pass the political process and if so, when will the market have clarity?" Asked to all respondents involved in the EU ETS. N=748

…

Outlook for permanent cancellation of allowances

…

+33

Timeline for permanent cancellation "When do you expect a permanent cancellation to start?" Asked to respondents who expect cancellation. N=314

…

Figures - uploaded by Emil Dimanchev

Content may be subject to copyright.

Content uploaded by Emil Dimanchev

Content may be subject to copyright.

CARBON 2013

At a tipping point

One in ﬁve emitters surveyed say the EU ETS no longer has a signiﬁcant impact on

emission reductions. However, survey participants have a positive long-term outlook. 65 percent

believe the EU will adopt the backloading proposal. A majority expect that most of the structural

reforms proposed by the European Commission will be implemented. Around half say the long term

carbon price is a decisive factor in investment considerations.

The CDM market is witnessing a termination of activities of an unprecedented scale.

Out of all surveyed compliance entities, 45 percent report termination of investment activities.

71 percent expect new demand to emerge in the medium term. However, more than half say the

market is beyond its peak and prices will remain low for the foreseeable future, against only 17

percent who disagree with this statement.

California’s emissions trading scheme has caused a quarter of regulated companies

surveyed to reduce emissions and another 20 percent to plan reductions in the future.

Some 57 percent consider the long term carbon price a decisive factor for new investments in their

industry.

The majority of participants in the Australian Carbon Pricing Mechanism believe a cap-

and-trade programme will start in July 2015, even though the elections in September are

likely to yield a change of government. Most regulated companies are preparing for the emissions

trading system by setting up trading operations or reducing emissions.

Among Korean carbon market professionals, two thirds believe the planned carbon

market will begin in 2015, while three quarters are conﬁdent it will reduce emissions.

Most survey participants do not expect the carbon price to affect the competitiveness of South

Korean industry in international markets.

A third of respondents believe some of China’s pilot carbon trading programmes will

start in 2013, down from 52 percent a year ago. However, 78 percent of survey participants

share the opinion that the world’s largest emitter will have a nationwide emissions trading

programme eventually.

Carbon market professionals are increasingly disappointed with the global climate

negotiations. For the ﬁrst time since Copenhagen more than half of respondents are dissatisﬁed

with the outcome of the latest Conference of the Parties.

TO THE POINT

Carbon 2013

About the report:

This report was written and edited by Emil Dimantchev, Ashley Lawson, Marcus Ferdinand, Hongliang Chai,

Anders Nordeng, Hæge Fjellheim, Stig Schjølset, and Frank Melum. For citations, please refer to: Point

Carbon (2013): ”Carbon 2013.” Dimantchev, E. et al. 33 pages.

ABOUT THOMSON REUTERS POINT CARBON

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iii

EXECUTIVE SUMMARY

March 2013

We launch our eighth annual survey at a time when

the world’s largest carbon markets are in a state of

crisis. The EU ETS is gripped with uncertainty. Will

policy makers reduce the oversupply in the market

or will it enter a period of extremely low prices and

minor signiﬁcance? In 2012, the challenges of the

CDM became more acute as oversupply soared and

prices tumbled. But CO2 trading has become a tale of

two markets – California’s carbon market is showing

resilience, after it withstood a legal challenge last year

and successfully came into force in January 2013.

The EU ETS is viewed as more cost-effective than a

year before. A lower share of participants however

considers it a mature market, after a year of high-level

discussions on market intervention. The recent growth

in the market’s oversupply and the drop in the carbon

price have impacted its ability to reduce emissions. One

in ﬁve regulated companies surveyed says that, while it

caused emission reductions in the past, the EU ETS has

little impact today.

However, our survey participants have a positive outlook

for the long-term. As many as 65 percent believe the

EU will pass the “backloading” proposal. The majority

of participants expect the EU to also adopt more radical

reforms - 77 percent expect that EU’s 2020 emission

reduction target will be deepened to 30 percent, while

72 percent think that the scope of the EU ETS will be

expanded.

The CDM market is witnessing an exodus of market

participants – 45 percent of compliance entities

surveyed say they will cease investing in CDM projects

in the next three years, up from only 14 percent in last

year’s survey; and 26 percent plan to stop procurement

and trading of primary CERs, up from only 8 percent

last year. Just over half agree to the statement that the

CDM is beyond its peak and prices will remain low in the

foreseeable future. Amid low prices, four in ﬁve project

developers and investors surveyed report readiness to

explore opportunities in the voluntary offset market.

In California, regulated companies have been preparing

for the inauguration of the state’s carbon market by

mainly setting up trading operations and planning

emission reductions. A quarter of compliance entities

surveyed report they have already reduced emissions as

a result of California’s cap-and-trade system. Another

20 percent plan to reduce emission in the future. More

than half consider the long term carbon price to be

a decisive factor in investment decisions. Trading of

California Carbon Allowances has ramped up recently

and will likely continue to accelerate this year. A majority

of carbon market professionals expect the price to be

between $10/t and $15/t in 2013.

More than half of participants continue to expect

Australia’s cap-and-trade programme to begin as

planned in July 2015, despite the likelihood of a change

in government in September 2013. Surveyed companies,

which have an obligation under the Carbon Pricing

Mechanism, are preparing for the scheme by mainly

establishing operations for buying allowances and

offsets and engaging in internal abatement. Regulators

of the Australian and the European carbon markets

announced last year they would link the two schemes

in 2015. However, only 11 percent say they are currently

investing in EUAs.

As South Korea prepares to launch an emissions trading

scheme in 2015, survey participants have positive

expectations about the scheme’s potential. Two thirds

expect the carbon market to become operational as

planned in January 2015. A further 74 percent share the

opinion that the scheme will drive domestic emission

reductions. Most do not expect Korea’s ETS to cause

carbon leakage, but still 18 percent think that it will

hurt Korean industry’s competitiveness in international

markets.

A lower share of participants believes that some of

China’s regional programmes will start this year. This

share is down to a third from 52 percent since last year’s

survey. Yet, most respondents, or 78 percent, believe

that the world’s largest emitter will have a nationwide

emissions trading system eventually. Around 60 percent

expect such a scheme to be in place by the end of 2020.

The latest high level climate change meeting produced

a continuation of the Kyoto protocol, which will cover

around 15 percent of global emissions. Our survey

results conﬁrm a trend of increasing disillusionment

with the multilateral climate negotiations, which began

with the conference in Cancun. The share of participants

who believe there will be a global agreement with

internationally binding targets for major emitters fell to

27 percent from 34 percent from last year. More than

a third of participants expect the current pledge-and-

review climate regime to continue after 2020.

March 2013

1 INTRODUCTION 1

2 EU ETS 2

2.1 Does the EU ETS work? 2

2.2 Backloading and structural reform 5

2.3 Company positions in phase 3 7

2.4 Use of the credit limit 9

2.5 Price expectations 11

2.6 Aviation 11

2.7 Post-2020 12

2.8 Linking 13

3 CDM 13

3.1 Market strategies 14

3.2 The future of CDM 17

3.3 JI 18

3.4 CER/ERU prices 18

4 NORTH AMERICAN CARBON MARKETS 19

4.1 California/WCI 19

4.2 North American offsets 20

5 CARBON MARKETS IN ASIA AND OCEANIA 22

5.1 Australia 22

5.2 New Zealand 26

5.3 Korea 26

5.4 China 30

6 INTERNATIONAL NEGOTIATIONS 31

TABLE OF CONTENTS

March 2013

1Carbon market roles 1

2Assessing the EU ETS 2

3EU ETS and internal abatement 3

4EU ETS and carbon leakage 4

5 Carbon price importance for investment decisions 4

6Backloading to the future 5

7Outlook for permanent cancellation of allowances 6

8Timeline for permanent cancellation 6

9Options for market reform 7

10 What best describes your company’s situation in the EU ETS phase 3? 8

11 Use credits or bank them? 8

12 Expectations for CER/ERU surrender for 2012 compliance 9

13 Expectations for average EUA price in phase 3 9

14 Expectations for average CER price in phase 3 10

15 The future of aviation in the EU ETS 10

16 Will the EU ETS exist beyond 2020? 11

17 Will CERs be eligible for compliance after 2020? 11

18 Linking expectations 12

19 Assessing the CDM 12

20a-c Plans for 2013-2015 13

21 Opportunities in the voluntary market 14

22 Developing CDM niches - projects in Least Developed Countries 14

23 Developing CDM niches - investing in PoA projects 15

24 The future of CDM 15

25 The CDM policy dialogue 16

TABLE OF FIGURES

March 2013

26 Expectations for new demand in the medium term 16

27 Future EU ETS credit restrictions? 17

28 Sources of ERU issuance post-2012 17

29 What price level will spur new investments? 18

30 What price level will incentivize new request for issuance? 18

31 How to be in compliance? 19

32 What best describes your company’s situation in the California cap-and-trade programme

in the ﬁrst compliance period?

33 Impact of the WCI cap-and-trade programme 21

34 Carbon price inﬂuence on investment decisions 21

35 Carbon leakage as a result of carbon cost? 22

36 Price expectations for WCI allowances in 2013 22

37 Price expectations for WCI allowances in 2020 22

38 Assessing the North American offset market 23

39 Evaluating North American offset types 23

40 Australia’s cap-and-trade programme a fait accompli? 24

41 How is your company preparing for Australia’s cap-and-trade programme? 24

42 Carbon leakage in Australia 25

43 Linking expectations 25

44 Impact of the NZ ETS on emission reductions 26

45 Will the South Korean ETS take effect in 2015? 27

46 Will the planned ETS reduce emissions in South Korea? 27

47 Carbon leakage in South Korea 27

48 Expectations for the South Korean carbon price in 2015 28

49a-b Towards emission trading in China 28-29

50 Outlook for a Chinese national ETS 29

51 I can’t get no satisfaction 30

52 What do you expect the overall global policy framework after 2020 to look like? 30

53 How likely is a global agreement for post-2020 by 2015? 31

54 ETSs around the world - Asia steps up 32

55 New crediting mechanisms - new opportunities? 32

Carbon 2013

1. INTRODUCTION

The world’s largest carbon

markets are at a tipping point.

Oversupply and consistently low

prices threaten to render the EU

ETS insigniﬁcant. Regulators

offered to withdraw allowances

from the market, but the proposal

faces an uncertain future in the

absence of clear support from

a majority of European policy

makers. Political uncertainty also

clouds the prospects for a carbon

market in Australia. Canberra

put a price on carbon in 2012;

however the projected winner of

the 2013 general elections pledges

to repeal it. Meanwhile, prices

for Certiﬁed Emission Reductions

(CERs) trade below 1 euro per ton

after collapsing in 2012 amid rising

issuance and low international

demand.

Yet emerging carbon markets offer

silver linings. California regulators

cleared their ﬁrst auction in

2012 and initiated the state’s

carbon market on 1 January 2013.

Regulated companies are now

implementing their compliance

strategies and trading of permits

is accelerating. Last year South

Korea and China announced plans

for national and regional schemes.

In 2012, international negotiations

under the UNFCCC produced a

continuation of the Kyoto protocol.

The second commitment period

will run from 2013 to 2020

and include around 15 percent

of global emissions. Due to

constraints on public budgets at

home, developed countries in Doha

avoided scaling up current climate

ﬁnance pledges.

In this context, we release our

eighth annual survey of the world’s

carbon markets. In Carbon 2013,

we continue to explore how market

participants and observers view

the present and the future of CO2

trading. Our survey covers the EU

ETS, CDM, JI, New Zealand ETS,

the Western Climate Initiative

(WCI) comprised of California and

Quebec, emerging carbon markets

in Asia and Australia, as well as

international negotiations.

This year’s survey ran from 30

January to 24 February and

garnered views from a total of

2,041 respondents, using a web-

based tool. Compared to last year’s

survey, 1,108 fewer participants

took part, a fact which probably

1,108 fewer participants

took part after closures

of carbon market

activities in 2012

Figure 1: Carbon market roles

Categories of respondents, N=1948

Source: Thomson Reuters Point Carbon

13%

14%

16%

28%

0% 5% 10% 15% 20% 25% 30%

Lender (private/public/international bank)

International organisation (e.g. U.N., EU, OECD)

University

National government

Financial trader

Interest group (e.g. NGO, business federation)

Compliance entitiy with emissions subject to an ETS

Other

Project owner/developer/investor in CMD/JI projects

Service provider (e.g. consultancy, exchange)

March 2013

reﬂects the recent shrinkage

of carbon market activities,

particularly in the CDM segment.

Figure 1 illustrates the distribution

of participants according to their

role in their respective carbon

markets.

Among the respondents, 28

percent describe themselves as

service providers. In this subgroup,

project management consultants

comprise the largest segment,

accounting for 33 percent of

all service providers. Technical

consultants represent 26 percent

of this subgroup, followed by

professionals involved in research,

analysis, or news, accounting for

14 percent.

The second largest group of

respondents is investors and

developers involved in the primary

CDM and JI markets. These

account for almost 16 percent of

all participants. Within this group,

78 percent are involved in the CDM

market.

Compliance buyers with emissions

subject to a cap-and-trade scheme

represent 13 percent of our sample.

The majority of this group has

a compliance obligation under

the EU ETS. These make up 202

compliance buyers, or 80 percent

of all regulated entities in our

survey. The number of respondents

with emissions covered under

the Australian Carbon Pricing

Mechanism (CPM) is 19, followed by

compliance buyers in the Western

Climate Initiative (California or

Quebec), at 15.

It should be noted that this survey

is conducted among individuals

with signiﬁcantly more than

average interest in carbon trading.

Since taking the survey is based

in part on individual motivation,

the sampling of various subsets

of the carbon community is less

than scientiﬁc and thus susceptible

to bias. All interpretations of

the survey should therefore be

read bearing in mind that the

sample has not been drawn in a

representative way. Furthermore,

inferences to general public

opinion should be avoided.

2. EU ETS

The oversupply of the EU ETS

has continued to rise. Last year

saw the largest gap between

annual supply and demand in the

market’s history. The average price

for European Union Allowances

(EUAs) dropped from double digits

in 2011 to 7.30/t in 2012.

Figure 2: Assessing the EU ETS

Share of respondents agreeing with the given statements, given as options 4 to 5 on a scale from “strongly disagree”

(1) to “strongly agree” (5). Asked to complaince companies, ﬁnancial institutions, banks, carbon funds, brokers,

governments and consultants involved in the EU ETS, N=766

Source: Thomson Reuters Point Carbon

March 2013

2.1 Does the EU ETS work

Nearly half of all respondents

consider the EU ETS to be the

most cost-efﬁcient way to reduce

emissions in the EU. The share

of participants who agree with

this statement is at its highest

level since we started the survey

seven years ago. We attribute

this sentiment to the proven

adaptability of the market

to broader macroeconomic

conditions. Last year, the EU ETS

responded to the contracting

economic activity in the EU by

generating lower EUA prices.

The recent market developments,

however, have affected the image

of the EU ETS as a mature market.

Only 27 percent of respondents

say the market is mature, down

by 10 percentage points from last

year. The fact that more and more

ﬁnancial players have left the

EU ETS due to lower price levels

The low prices reﬂect the fact that

Europe’s emission reduction target

has become easier to meet. There

are two main reasons for this –

poor economic conditions and

the EU’s policies for promoting

renewable energy and energy

efﬁciency outside of the EU ETS.

However, many market

participants fear that low EUA

prices have an unintended

consequence – they can make the

EU ETS insigniﬁcant. Amid low

prices, governments that aim to

decarbonize their economies can

enact national climate policies

and gradually replace the pan-

European carbon market. Such

threats to the future of the market

have prompted the European

Commission to put forward

proposals to reduce the oversupply

of the EU ETS. Discussions on

these proposals ramped up in

2012 and became the main driver

for EUA prices.

and higher regulatory uncertainty

could be one reason why a lower

share of participants considers the

market mature. Discussions over

market intervention and changes

to the overall market design also

indicate a market which is still in

development.

Respondents’ perspectives on

emission reductions are in line

with previous surveys. Around half

of respondents report the EU ETS

has caused abatement in their

company. This year, we examined

this result further by including

two new response options in the

question – “the EU ETS has caused

and continues to cause emission

reductions” and “the EU ETS did

20 percent say the EU

ETS caused emission

reductions in the past but

is no longer signiﬁcant

Figure 3: EU ETS and internal abatement

“To what extent has the EU ETS caused your company to reduce its own emissions?” Questions asked to EU ETS

compliance entities, N=178

Source: Thomson Reuters Point Carbon

48% 46% 47% 54% 59% 50%

33%

20%

17% 16% 15% 10% 9%

11% 6%

14% 30% 29% 25% 24% 31% 25%

20% 8% 9% 12% 9% 9% 17%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013

Don't know/cannot answer

EU ETS has not caused any emission reductions in our company

EU ETS has caused reductions to be planned but not yet started

The EU ETS did cause reductions in the early years, but has little impact today (asked in 2013)

The EU ETS has caused and continues to cause emission reductions in my company (asked in 2013)

EU ETS has already caused emission reductions in my company

Carbon 2013

Figure 5: Carbon price importance for investment decisions

“How important is the long-term carbon price (e.g. in 2020) for new

investments in your industry?” EU ETS compliance entities, N=173

Figure 4: EU ETS and carbon leakage

“Has your company considered moving production outside the EU ETS area

because of carbon costs?” Question asked to EU ETS compliance entities, N=173

2% 4% 3% 6% 5% 5%

3% 2% 2% 2% 2% 1%

12% 13% 12% 13% 11% 8%

83% 81% 84% 80% 81% 86%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013

Yes, are considering

moving production

Yes, have planned to

move production

Yes, have already

moved production

Source: Thomson Reuters Point Carbon

39% 38% 42% 47% 44% 38% 45%

53% 56% 48% 47% 52% 55% 49%

8% 6% 10% 7% 4% 7% 6%

20%

40%

60%

80%

100%

2007 2008 2009 2010 2011 2012 2013

Decisive factor

Influencing calculation, but not decisive

No importance

cause reductions in the early years

but has little impact today”. Of all

respondents, 20 percent say that

the ETS is not reducing emissions

in their companies anymore,

while 33 percent state the system

continues to cause emission

reductions.

The share of respondents who plan

to reduce emissions as a result of

the EU ETS has nearly halved from

11 percent in 2012 to only 6 percent

in 2013. These results imply an

overall weaker incentive to reduce

emissions, which most likely results

from the drop in prices and the

increased regulatory uncertainty.

The share of participants who are

unsure if the market is causing

emission reductions has almost

doubled from 9 percent to 17

percent.

Our respondents see a low risk

of carbon leakage for EU ETS

companies – moving production

to a region with a lower price of

carbon. Compared to previous

years, a somewhat smaller

share of respondents consider

moving production outside the

EU ETS territory (9 percent in

2013 compared to 13 percent in

2012). Meanwhile 86 percent of

the respondents see no reason

for moving production, up slightly

from 81 percent in 2012. One of

the factors behind these results is

likely the generous classiﬁcation

of companies that are considered

under risk of carbon leakage, which

allows them to receive a larger

amount of allowances for free.

Our participants’ views on the

importance of the long term carbon

price for investment decision have

stayed largely the same. Out of

202 surveyed compliance entities,

45 percent say the long term

EUA price is a decisive factor for

investments in their industry. Since

last year’s survey, there has been a

shift from the share of respondents

who say the price only inﬂuences

calculations to those who consider

it a decisive factor.

Despite the current challenges of

the EU ETS, the compliance entities

we surveyed believe the market will

remain signiﬁcant in the long term.

This belief is likely born out of their

expectations that policy makers

will implement measures to reduce

the oversupply in the market. In

the following section we explore

what participants expect from the

Commission’s proposals to reform

the market.

March 2013

2.2 Backloading and

structural reform

The European Commission has

proposed to reduce the oversupply

in the market through short- and

long-term measures. Its proposal

for short-term intervention is

to delay the auctioning of 900

million allowances to the later

years of phase 3, known as

“backloading”. This plan would

reduce the oversupply in the

next few years but not change

the overall supply and demand

balance in the market. To address

the long-term balance, the

Commission offers six options.

One of these includes the

cancellation of the “backloaded”

allowances. Other proposals

include deepening the EU’s

emission reduction target and

including other sectors in the EU

ETS.

The proposals for backloading and

Figure 6: Back-loading to the future

“Do you think that backloading will pass the political process and if so, when will the market have clarity?” Asked to all

respondents involved in the EU ETS. N=748

for structural reforms follow two

different legislative processes. We

asked our participants how likely

each is to be implemented and

when it will take effect.

A large majority of respondents,

or 65 percent, expect backloading

to be adopted. Views however

differ as to when the backloading

will take effect. Some 27 percent

believe it will be implemented in

the second half of 2013 while 30

percent say it will come into force

in 2014 or later.

Views also vary depending on

participants’ role in the market.

Out of all compliance entities, 63

percent anticipate backloading.

Financial traders are more

bullish- as many as 75 percent of

them believe allowances will be

backloaded.

Out of all market participants,

only 14 percent do not expect

backloading to pass, but a

signiﬁcant share of respondents, 21

percent, expresses uncertainty over

if and when the EU will implement

the proposal.

Our survey participants are less

optimistic about the prospects

of permanent cancellation than

for backloading. Less than half,

or 42 percent, believe that some

allowances will be cancelled,

while 31 percent expect no

permanent cancellation at all.

Uncertainty among respondents

is also signiﬁcant, with 27 percent

saying they are unsure. Among

those who believe allowances will

be cancelled, the largest share

expects a removal of 900 million

tons.

65 percent believe that

backloading will be

adopted

Source: Thomson Reuters Point Carbon

27%

18%

12% 14%

21%

10%

15%

20%

25%

30%

First half of

2013

Second half of

2013

First half of

2014

Second half of

2014 or later

No,

backloading

will not

happen

Don't

know/cannot

answer

Figure 5: Carbon price importance for investment decisions

“How important is the long-term carbon price (e.g. in 2020) for new

investments in your industry?” EU ETS compliance entities, N=173

Figure 4: EU ETS and carbon leakage

“Has your company considered moving production outside the EU ETS area

because of carbon costs?” Question asked to EU ETS compliance entities, N=173

Carbon 2013

Figure 7: Outlook for permanent cancellation of allowances

“Do you think that there will be a permanent cancellation of allowances, and if so, how many allowances will be

permanently taken out of the market?” Asked to all respondents involved in the EU ETS. N=748

Looking at the likely timeline

for permanent cancellation, 38

percent expect it to take place

in 2016. Meanwhile, more than

half think it will take place

by 2015. This is an ambitious

timeframe since the cancellation

of allowances will require a

signiﬁcant amendment of the EU

ETS directive.

We also asked survey participants

about when, if ever, they believe

that each of the proposals for

structural market reform will

take place (Figure 9). Most

respondents believe that most

of the proposals will be adopted,

with the greatest conﬁdence

in a strengthening of the 2020

target. The results conﬁrm an

overall consensus in the market

that the EU will act to reduce the

oversupply of the EU ETS.

Figure 8: Timeline for permanent cancellation

“When do you expect a permanent cancellation to start?” Asked to respondents

who expect cancellation. N=314

Source: Thomson Reuters Point Carbon

11%

21%

31%

27%

10%

15%

20%

25%

30%

35%

Yes, 400 Mt

allowances

will be taken

out.

Yes, 900 Mt

allowances

will be taken

out.

Yes, 1200 Mt

allowances

will be taken

out.

Yes, other

volume,

please specify:

No,

permanent

cancellation

will not

happen.

Don’t

know/cannot

answer

Source: Thomson Reuters Point Carbon

30%

27%

38%

2014

2015

2016 or later

Don't

know/cannot

answer

March 2013

at least 80 percent by 2050,

compared to 1990 levels.

Another option our respondents

see as very likely is an extension

of the scope of the EU ETS. As

many as 72 percent of respondents

believe this will take place either

before or after 2020. The least

likely option according to our

participants appears to be the

implementation of a discretionary

price management mechanism.

Only a third of respondents believe

such a mechanism will ever be

implemented.

2.3 Company positions in

phase 3

Phase 3 of the EU ETS brings

with it major changes to how

allowances are allocated and

to whom. The EU grants free

allocation to the industry and

aviation sectors as well as

Looking at individual options

for reform, the highest share

of respondents, or 77 percent,

believes that the EU will increase

its 2020 emission reduction target

to 30%. One way to do this is to

increase the linear factor, which

determines the rate at which the

cap is reduced each year. There

are 61 percent of respondents who

believe this factor will be revised.

The current linear reduction factor

is 1.74 percent. We project that

an annual reduction in the cap of

1.74 percent will not be sufﬁcient

to meet EU’s long-term climate

target - to reduce emissions by

utilities in Eastern Europe. For

industrial emitters, allowances are

allocated on the basis of efﬁciency

benchmarks. Installations receive

as many allowances as are needed

to cover most of the emissions

of the 10 percent most efﬁcient

installations, which produce the

same product.

Partially due to the complexity

of this method, the process of

determining the exact amount of

allocation for each installation

has run into delays. When we

launched our survey, the allocation

per installation had not been

determined. Participants, however,

gave us their assessment of their

position in phase 3 (Figure 10).

A large share of participants, or

44 percent, reports a need to buy

allowances at auctions or in the

secondary market. This reﬂects

the shift from free allocation

Figure 9: Options for market reform

“When (if ever) do you think the proposed structural measures will be implemented?” Asked to all respondents involved in

the EU ETS. N=738

the results conﬁrm an

overall consensus in the

market - the EU will reduce

the system’s oversupply

Source: Thomson Reuters Point Carbon

38%

51%

40% 32%

43%

19%

38% 13%

21% 40% 19%

14%

12%

19%

10%

18%

30%

11% 17%

29%

18% 19%

38%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Increasing the

EU GHG

target to 30%

Retiring a

number of

allowances

Early revision

of the linear

reduction

factor

Extension of

the scope

Limiting the

access to

international

credits

Discretionary

price

management

Don't

know/cannot

answer

Never

After 2020

Before 2020

Carbon 2013

Figure 10: What best describes your company’s situation in the EU ETS phase 3?

Question asked to EU ETS compliance entities. N=183

Figure 11: Use credits or bank them?

Question asked to EU ETS compliance entities. N=182

Source: Thomson Reuters Point Carbon

12%

44%

22%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Suplus EUAs to

sell

Allocation

equals

compliance

needs.

Need allocation

+ some of the

credit limit

Allocation + full

credit limit

needed for

compliance.

Need allocation,

full credit limit,

and to buy EUAs

Don't

know/cannot

answer

Source: Thomson Reuters Point Carbon

28%

22%

47%

24%

23%

49%

28%

23%

42%

40%

18%

37%

0% 10% 20% 30% 40% 50% 60%

Use entire CER/ERU limit in phase 2

Bank up to 50% of the CER/ERU limit into

phase 3

Bank more than 50% share of the CER/ERU

credit limit into phase 3

Don't know/cannot answer

2013

2012

2011

2010

March 2013

Figure 13: Expectations for average EUA price in phase 3

Asked to all respondents involved in the EU ETS. N=759

to auctioning as the default

method to distribute allowances.

Interestingly, for as many as 12

percent, the free allocation is more

than enough to meet compliance

needs. This could reﬂect low

production levels compared to

the historical production data

used to determine the amount

of allocation. Since the process

of allocating allowances was not

complete by the time we launched

our survey, understandably 22

percent reported they did not know

their position in phase 3.

2.4 Use of the credit limit

So far, 558 million credits have

been used for compliance in phase

2. The total amount that can be

used for phase 2 compliance

is 1400 million. Last year’s 90

percent drop in prices for Certiﬁed

Emission Reductions (CERs) made

it more proﬁtable for compliance

entities to use credits for

compliance.

As a result, our survey participants

Figure 12: Expectations for CER/ERU surrender for 2012 compliance

Asked to all respondents involved in the EU ETS. N=761

Source: Thomson Reuters Point Carbon

10%

13%

10%

42%

More than 500 million

400-499 million

300-399 million

250-299 million

200-299 million

Below 200 million

Don’t know/cannot answer

Source: Thomson Reuters Point Carbon

10%

17%

29% 32%

11%

10%

15%

20%

25%

30%

35%

Less than €1

per tonne

€1 - €2.99 per

tonne

€3 - €4.99 per

tonne

€5 - €7 per

tonne

More than €7

per tonne

opinion/cannot

respond

report a higher willingness to

use the entire phase 2 credit

limit for compliance. This share

of respondents has increased by

12 percentage points since last

year to 40 percent. Another factor

inﬂuencing participants’ intention

to use their credit limit is the

restriction placed on the use of

CERs from certain project types

from 2013.

Overall, the number of credits

used for 2012 compliance is likely

to increase compared to previous

years. One-third of the respondents

that provided a view on the

expected number of CERs/ERUs

Carbon 2013

Figure 15: The future of aviation in the EU ETS

“Which ﬂights do you think will be included in the EU ETS after 2013?” Asked to all respondents involved in the EU ETS.

N=727

Figure 14: Expectations for average CER prices in phase 3

Asked to all respondents involved in the EU ETS and CDM. N=1138

Source: Thomson Reuters Point Carbon

12%

17%

21% 21%

14% 14%

10%

15%

20%

25%

Less than €0.50

per tonne

€0.50-0.99 per

tonne

€1 - €2.99 per

tonne

€3 - €5 per

tonne

More than €5

per tonne

opinion/cannot

respond

Source: Thomson Reuters Point Carbon

32%

41%

18%

10%

15%

20%

25%

30%

35%

40%

45%

Intra-EU and extra-

EU flights

previously included

in the scheme

Only intra-EU

flights

All flights will be

excluded

Other, please

specify

Don't know/cannot

answer

March 2013

surrendered for 2012 compliance

believe more than 400 million

credits will be used. Compliance

entities surrendered 256 million

credits in 2011. We expect the

2012 credit usage to be between

400 and 450 million tons.

2.5 Price expectations

To gauge price expectations, we

surveyed traders, compliance

entities, project developers, and

service providers with a stake

in the EU ETS about what they

expect the average EUA price

to be in phase 3. The majority of

respondents think that the carbon

price will average €5/t or higher

in phase 3 with over 30 percent

saying that the phase 3 price will

average above €7/t.

These results imply that

respondents expect prices to

increase signiﬁcantly from current

levels. So far in 2013, EUAs have

traded at an average of €4.90/t.

The higher price expectation is

consistent with the belief most

market participants share that the

EU will reduce the oversupply in

the market. The price projection

of most respondents most

likely reﬂects a backloading of

allowances as well as structural

reforms such as the cancellation

of allowances, as we think both

will be needed to increase prices

signiﬁcantly.

We also asked carbon market

professionals involved in the EU

ETS where they expect CER prices

to be in phase 3. The majority

believe the average price will be

above €1/t, but only 14 percent

expect it to be above €5/t.

2.6 Aviation

When they entered the scheme in

2012, airlines had to comply with

Figure 16: Will the EU ETS exist beyond 2020?

Asked to all respondents involved in the EU ETS. N=757

Figure 17: Will CERs be eligible for compliance after 2020?

Asked to all respondents involved in the EU ETS. N=735

77%

11%

12%

77%

12%

10%

69%

18%

14%

0% 20% 40% 60% 80% 100%

Yes

Don’t know

2013

2012

2011

Source: Thomson Reuters Point Carbon

17%

23%

60%

Yes

Yes, but use of CERs will

be further tightened

the EU ETS for all ﬂights arriving

or departing from EEA airports.

However, in November last year,

the Commission proposed reducing

the scope of the aviation sector by

exempting all extra-EU ﬂights from

the 2012 compliance obligation.

The so called “stop the clock” plan

proposes to introduce these ﬂights

again into the scheme in 2013, if

the meeting of the International

Civil Aviation Organization does

not produce a global framework for

reducing emissions in the aviation

sector.

A third of our respondents believe

that extra-EU ﬂights will be

introduced in the scheme again. A

Carbon 2013

Figure 18: Linking expectations

Asked to all respondents involved in the EU ETS. N=735

Figure 19: Assessing the CDM

Share of respondents agreeing with the given statements, given as options 4

and 5 on a scale from “strongly disagree” (1) to “strongly agree” (5). Asked to

all respondents involved in CDM. N=755

larger share, of 41 percent, believes

that only intra-EU ﬂights will be

included in the EU ETS after 2013.

2.7 Post-2020

A large majority of survey

participants expect the EU ETS

to continue beyond 2020. This is

not surprising considering that

current legislation stipulates the

continued existence of the carbon

market with a cap which falls by

1.74 percent each year. Notable,

however, is a slight decrease of

eight percentage points in the

share of respondents who believe

so. The share of participants who

do not expect the market to exist

post 2020 has also increased

slightly by six percentage points.

The eligibility of CERs will

most likely continue after

2020, according to most of our

respondents. The majority however

believes that there will be further

restrictions on eligible credits.

Source: Thomson Reuters Point Carbon

63%

21%

14%

17%

40% 38%

33%

20%

24%

37%

11%

19%

24% 22%

10%

20%

30%

40%

50%

60%

70%

Australia California-Québec

(WCI)

South Korea China (national

and/or provincial)

By 2020 Between 2020 and 2030 After 2030/never Don't know/cannot answer

March 2013

Figure 20 a-c: Plans for 2013-2015

Asked to compliance entities in the EU ETS, Australian ETS, and NZ ETS. N=176

2.8 Linking

Considering the potential for

linking with other markets, survey

respondents indicate Australia as

the ﬁrst destination to link with

the EU ETS, after regulators from

both markets last year announced

plans for linkage. A slightly higher

share believes the EU ETS will link

with the WCI (21 percent) than

with South Korea (14 percent) by

2020. A third believe the EU ETS

will link with carbon markets in

China between 2020 and 2030.

3. CDM

The CDM market experienced

severe difﬁculties in 2012.

Market supply surged as project

developers rushed to register

projects before the end of the year

to ensure their credits are eligible

for use in the EU ETS. Demand,

however, was stagnant – the

outcome of Doha’s Conference

of the Parties (COP) did not

generate any signiﬁcant new

ambition to reduce emissions and

therefore led to no new demand

for Certiﬁed Emission Reductions

(CERs). Prices for secondary CERs

lost 90 percent of their value over

the year.

In this year’s survey, we continued

to ask CDM professionals about

the cost-effectiveness and

maturity of the market to examine

how opinions have changed over

time. Given the precarious state

of the market, we also asked

investors and project developers

how their business activities are

changing and where they see the

The share of participants

reporting termination of

CDM investments has

tripled since last year

Source: Thomson Reuters Point Carbon

14%

38%

42%

14%

30%

33%

24%

45%

16%

30%

0% 20% 40% 60%

Stop completely

Decrease

somewhat/significantly

Stay as it is

Increase somewhat/significantly

Investing directly in CDM projects

2013

2012

2011

47%

40%

21%

44%

29%

16%

25%

37%

22%

0% 20% 40% 60%

Stop completely

Decrease somewhat/significantly

Stay as it is

Increase somewhat/significantly

Purchasing/trading sCERs

2013

2012

2011

CDM market going forward.

Market participants show more

certainty that the CDM is the

most cost-effective way to reduce

emissions in developing countries.

The share of respondents who

agree with this statement has

risen by seven percentage points

since last year’s survey. Similarly,

a higher share of participants view

the market as mature compared

to 2012.

Carbon 2013

However, despite their upward

trends, these statistics remain fairly

low. Less than half of respondents

think the CDM is the most cost

effective means of climate change

mitigation in the developing world

and less than a third think it is a

mature market.

3.1 Market strategies

Looking at investment and

purchasing plans for the next

three years, respondents report

a notable unwinding of activities.

A whole 45 percent say they will

cease investments in CDM projects.

The share of respondents reporting

termination of investments rose

to 45 percent, up from only 14

percent last year. Likewise, only 8

percent report plans to increase

investments, down from 24 percent

a year earlier.

Half of respondents plan to stop or

decrease procurement or trading of

primary CERs, up from 37 percent

last year. Similarly, the share of

investors surveyed planning to

increase purchasing of primary

CERs is 12 percent, half of what

this share was last year.

The slowdown of CDM activities

is somewhat less pronounced in

the secondary CER market. This

year, 16 percent of participants

report plans to stop purchasing

or trading, up from 6 percent last

year. The secondary market also

boasts the highest share, at 22

percent, of respondents who plan

to increase procurement or trading

activities.

Amid limited demand and low

prices, most participants, 64

percent, say they are ready to turn

to the voluntary offset market.

Meanwhile, only 19 percent of our

respondents do not plan to explore

this opportunity.

Figure 21: Opportunities in the voluntary market?

“If demand for CERs in compliance market keeps low, would you turn to the

voluntary market?” Asked to developers, investors and owners of CDM/JI

projects. N=271

Figure 22: Developing CDM niches - projects in Least Developed

Countries

“Is your company investing in CDM projects based in least developed countries

(LDCs)?” Asked to developers, investors, and owners of CDM/JI projects and

project portfolio managers. N=296

Source: Thomson Reuters Point Carbon

64%

19%

17%

We are rather flexible

to switch to voluntary

market in future

We consider only CDM

Pre-CDM credits of our

projects have already

been traded as VERs

Source: Thomson Reuters Point Carbon

32%

24%

44%

30%

16%

55%

10%

20%

30%

40%

50%

60%

Yes, we have already

invested in LDC-based

CDM projects

No, but we are planning

to invest in LDC-based

projects

No, and we have no

specific plans to do so

2012

2013

March 2013

Figure 23: Developing CDM niches - investing in PoA projects

“Is your company investing in CDM projects based in least developed countries (LDCs)?” Asked to developers, investors, and

owners of CDM/JI projects and project portfolio managers. N=296

Figure 24: The future of CDM

Participants asked to indicate the degree to which they agree with the following statements. Asked to all respondents

involved in the CDM market. N=745

Source: Thomson Reuters Point Carbon

22%

16% 20%

37%

26%

18%

47%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Have already

invested in at

least one PoA

Have already

invested in at

least one and

plan to invest

in new PoAs

No, but we are

planning to

invest in PoAs

No, but we are

planning to

participate as a

buyer

No, and we

have no

specific plans

to do so

2012

2013

Source: Thomson Reuters Point Carbon

17%

28%

26%

57%

46%

0% 10% 20% 30% 40% 50% 60%

The CDM market is beyond its peak

prices are likely remain low in the

foreseable future

The CDM will continue after 2020

Agree

Neutral

Disagree

Carbon 2013

In late 2012, the CDM Executive

Board enabled the cancellation

of CERs in the CDM Registry.

Project owners can now sell their

credits in the voluntary market

without the need for registration

with another system. However,

the ability to sell CERs will

likely be limited to projects that

bring environmental and social

beneﬁts other than the amount of

emissions abated. Sellers in the

voluntary market must meet the

diverse requirements of buyers,

whose purchases are most often

motivated by corporate social

responsibility and branding.

Credits from projects registered

after 2012 outside of a Least

Developed Country (LDC) will not

be eligible for use in the EU ETS.

However, the majority of CDM

investors surveyed report no plans

to develop projects in LDCs. This

share is higher than last year’s by

11 percentage points, a rise which

can be attributed to the sharp

drop in CER prices. The share of

respondents planning to invest in

LDC countries has also dropped

from 24 percent to 16 percent this

year. The low CER prices mean

that projects in LDC countries

will continue to be driven by

government aid funds rather than

private capital.

A niche segment of the CDM

market, Programme of Activities

(PoA), has seen an important

development since we published

last year’s report. The ﬁrst PoA

project issued credits last year for

distributing Compact Fluorescent

Light bulbs across Mexico. It

was quickly followed by two

other projects, which issued their

ﬁrst credits in early 2013, one in

Bangladesh and one in China.

However, the drop in CER prices

has affected the PoA market. The

share of respondents reporting no

Figure 25: The CDM policy dialogue

“How useful do you ﬁnd the recommendations from the CDM Dialogue?”

Asked to all respondents involved in the CDM market. N=742

Figure 26: Expectations for new demand in the medium term

Asked to all respondents involved in the CDM market. N=739

Source: Thomson Reuters Point Carbon

34%

21%

13%

33%

10%

15%

20%

25%

30%

35%

40%

Medium useful, some

of the proposals are

likely to be

implemented

Not very useful, few

of the proposals will

be implemented

Very useful, many

are likely to be

implemented (and

would boost CDM

development)

Don't know/cannot

answer

42%

29%

Yes, in local emission

trading systems (e.g.

China's regional pilots)

Yes, incorporating my

CDM project into

national initiative (as a

part of NAMA for

example)

Source: Thomson Reuters Point Carbon

March 2013

plans for investments rose by ten

percentage points to 47 percent.

Similarly, the share of survey

participants who have invested

in PoAs before and plan to invest

in the future fell by 9 percentage

points to seven percent.

2.2 The future of CDM

Most respondents believe the

woes of the CDM market are here

to stay. More than half agree to

the statement that the market is

beyond its peak and prices will

remain low for the foreseeable

future. Even at low prices, 46

percent of respondents expect

the CDM to continue to exist after

2020. Meanwhile, 28 percent

believe the CDM will cease to exist

by 2020.

Figure 27: Future EU ETS credit restrictions?

“Carbon credits from which CDM project types do you ﬁnd the most likely to be subject to new restrictions in the EU ETS?”

Asked to participants involved in the EU ETS and CDM markets. N=1106

Figure 28: Sources of ERU issuance post-2012

Will JI issuance come from Russia and/or Ukraine ? Asked to participants

involved in the JI market. N=242

Source: Thomson Reuters Point Carbon

27% 27%

17%

13%

30% 28%

21%

6% 4%

10%

15%

20%

25%

30%

35%

Large

hydro

N2O nitric

acid

Wind

Energy

efficiency

at coal

power

plants

Waste

All

renewable

projects

Other

No further

restrictions

on project

types in

phase 3

2012

2013

Source: Thomson Reuters Point Carbon

43%

33%

23%

Issuances will come from

Ukraine, not from Russia

JI will continue without

issuance from Russia and

Ukraine

Issuance will continue

from both Russia and

Ukraine

Issuances will come from

Russia, not from Ukraine

More than half expect

prices to remain low in

the foreseeable future

Carbon 2013

The CDM Policy Dialogue in 2012

put forward many proposals to

address the challenges facing

the CDM market. Over half of

our survey participants describe

these talks as somewhat or not

very useful and do not believe

many of the proposals will be

implemented.

However, asked whether they

expect any additional demand in

the medium term, most survey

participants answer in the

afﬁrmative. Some 42 percent

expect CDM credits to be eligible

for compliance in local emission

trading systems such as China’s

regional pilot programs. Another

29 percent believe that other

national initiatives such as

Nationally Appropriate Mitigation

Actions (NAMAs) can draw CERs.

A signiﬁcant 29 percent, however,

believe there will be no new

demand for CERs in the medium

term.

Most of our participants, 96

percent, expect the EU to impose

further restrictions on eligibility

of CERs. The largest share of

respondents believes that large

hydro will be ﬁrst on the ﬁring

line, followed by nitric acid and

energy efﬁciency at coal power

plants. The share of those who

expect no new restrictions has

fallen by nine percentage points

since last year after a recent

proposal in the EU to impose

further restrictions on the use of

ERUs in the EU ETS.

3.3 JI

The European Commission

voted to ban the use of Emission

Reduction Units (ERUs) in phase

3 of the EU ETS from countries

without a second commitment to

the Kyoto protocol. This restriction

will affect credits from Russia,

Figure 29: What price level will spur new investments?

“What price expectation for sCERs/ERUs in 2016 is sufﬁcient for justifying

investments in new CDM/JI projects?” Asked to developers, investors and

owners of CDM/JI projects. N=274

Figure 30: What price level will incentivize new request for issuance?

“What minimum sCER price is needed for you to request issuance for currently

operational CDM and JI projects?” Asked to developers, investors and owners

of CDM/JI projects. N=275

Source: Thomson Reuters Point Carbon

1% 3% 3% 5% 11% 10%

67%

10%

20%

30%

40%

50%

60%

70%

Less

than

€0.25/t

€0.5/t €1/t €2/t €3/t €4/t €5/t or

Source: Thomson Reuters Point Carbon

6% 9%

15% 12% 13%

44%

10%

20%

30%

40%

50%

Less than

€0.25/t

€0.5/t €1/t €2/t €3/t €4/t €5/t or

which is not likely to sign up to a

second commitment period.

Most respondents believe JI

will continue post-2012 without

issuance from Russia. While 43

percent believe issuance will come

mainly from Ukraine, 33 percent

agree there will be no issuance

from either Russia or Ukraine after

2012.

3.4 CER/ERU prices

How will future investment depend

on the price of CERs/ERUs?

Two-thirds of respondents say a

price at or above €5/t is enough

to justify new investments in CDM

or JI projects. We therefore think

investments will likely be limited

given our forecast for average CER

price of €0.44/t between 2013 and

2020.

March 2013

Figure 31: How to be in compliance?

Asked to WCI compliance entities. N=15

Source: Thomson Reuters Point Carbon

53% 50%

20%

10% 7% 10%

60%

53%

20%

7% 7%

Preparing to buy

allowances/offset

credits

Reducing our

emissions

Investing in offset

projects

Other We have not

started preparing

Don’t know

2012

2013

CDM projects issued credits in 2012

under contracts negotiated prior

to the collapse in prices. But what

price for CERs will be required in the

future for project owners to request

issuance? A share of 44 percent

report they need a price at or above

€5/t to request issuance. Only 7

percent will continue to issue if

prices are below €1/t. These results

imply that requests for issuance

should decline once current

contracts expire.

4. NORTH AMERICA

Since we published last year’s

survey, the North American

carbon markets have seen several

important developments. In

California regulators set up crucial

market infrastructure and saw the

state’s ETS successfully take effect

on 1 January 2013. Meanwhile,

Northeastern states involved in

the Regional Greenhouse Gas

Initiative (RGGI) agreed to tighten

the market’s cap, which has been

30 percent higher than emissions

since the market’s inception.

Shortly after the destructive

Hurricane Sandy hit New York’s

ﬁnancial centers, President Obama

put climate back on the national

agenda. In his State of the Union

Speech on 12 February, he urged

Congress to pass market-based

climate change legislation. And

if Congress fails to do so, he

pledged to increase regulation

under current laws such as the

Clean Air Act. Under the Act, the

Environmental Protection Agency

(EPA) can set direct emission limits

on new and existing power plants.

4.1 California/WCI

Preparations for the Californian

carbon market ran full tilt in 2012.

The California Air Resource Board

(CARB), which oversees the state’s

carbon market, launched an online

registry for holding allowances and

offsets and tracking transactions.

CARB held a successful practice

auction in August and later cleared

its ﬁrst real auction in November

2012. Bidders bought all offered

allowances for the ﬁrst compliance

period and some allowances

eligible in the second compliance

period beginning in 2015.

This year’s survey garnered the

views of 15 participants with an

obligation in the Western Climate

Initiative (WCI), of which California

is the predominant member.

Seven of the respondents operate

in the power sector, and the rest

represents a mix of manufacturers

including oil, gas and cement

producers.

Ahead of the market’s launch,

companies in our survey continued

compliance activities – internal

abatement, investment in offset

projects, and purchasing allowance

or offsets - in the same manner as

in 2011. About half of companies

Figure 30: What price level will incentivize new request for issuance?

“What minimum sCER price is needed for you to request issuance for currently

operational CDM and JI projects?” Asked to developers, investors and owners

of CDM/JI projects. N=275

Carbon 2013

are reducing their emissions

internally, nearly the same as last

year.

Looking at companies’ positions,

only one of the 15 respondents

indicated they will receive

allowances for free during the ﬁrst

compliance period. In comparison

to 2012 when 30 respondents

provided their input, the share of

respondents who would need to

buy either allowances or offsets

almost doubled to 73 percent.

California’s ETS has caused almost

half of our respondents to reduce

emissions or plan reductions in the

future. Four of our participants, or

27 percent, report the system has

already caused them to reduce

emissions. Another 20 percent of

our respondents plan emission

reductions in the future.

Out of the 15 compliance entities

surveyed, 57 percent say the long

term carbon price is a decisive

factor for investments in their

Figure 32: What best describes your company’s situation in the California cap-and-trade programme in the

ﬁrst compliance period (2013-2015)?

Asked to WCI compliance entities. N=15

44%

15%

33%

40%

27%

30%

73%

7% 7%

13%

10%

20%

30%

40%

50%

60%

70%

80%

Need to buy

offsets or

allowances

Receive enough

free allowances,

will not need

offsets

No compliance

obligation in the

first period

Don’t know

2011

2012

2013

industry. Meanwhile, 36 percent

say it inﬂuences their calculations.

In the questionnaire, we tried to

assess the number of companies

that would leave the state as

a result of the requirements

to reduce emissions. Of the 15

respondents, 67 percent indicated

their company did not think about

relocating to avoid emissions

regulations. Although this is down

by six percent from last year’s

survey, the share of companies

that have already moved

production or are considering

moving grew to 13 percent.

To gauge price expectations,

we surveyed a pool of 239

professionals involved in North

American carbon markets. A third

of these respondents include

consultants and analysts; another

29 percent are regulated entities,

project developers or ﬁnancial

traders.

Almost 60 percent said they

expect the price of California

allowances will range between the

price ﬂoor of $10.71/t and $15/t

in 2013. This is on par with our

WCI price forecast, as we foresee

a price of $15/t for 2013. About 19

percent of respondents expect the

price will be below the price ﬂoor,

and 18 percent said they think the

allowance price will be in the range

of $15-20/t.

Just over half of all participants

foresee prices in the $17-30/t range

by 2020. Some 27 percent were

more bullish, expecting the price to

be between $30 and $50/t. These

price expectations are modest

compared to our price forecast for

WCI allowances of $73/t in 2020.

4.2 North American

offsets

We surveyed 319 professionals

involved in North American carbon

markets about the effectiveness

of offsets from this continent.

More than half say they believe

Source: Thomson Reuters Point Carbon

March 2013

Figure 34: Carbon price inﬂuence on investment decisions

“How important is the long-term carbon price (e.g in 2020) for new

investments in your industry?” Asked to WCI compliance entities. N=15

Figure 33: Impact of the WCI cap-and-trade programme

“To what extent has the California and/or Quebec cap-and-trade

programme caused your company to reduce its own emissions?”

Asked to WCI compliance entities. N=15

Source: Thomson Reuters Point Carbon

36%

24%

28%

12%

35%

31%

21%

14%

20% 20%

27%

33%

10%

15%

20%

25%

30%

35%

40%

Has not caused

emission

reductions

Reductions to be

planned but not

yet started

Already caused

emission

reductions

Don't know

2011

2012

2013

57%

36%

Decisive factor

It does influence our

calculations, but not

decisively

No importance

the North American offset market

produces real emission reductions,

up by 12 percent from last year.

Forty-ﬁve percent said that they

think the American offset market

fosters innovation in emission

reduction methods. This share is

only slightly higher than last year by

six percentage points.

Over the last three years, offset

standards in North America have

consolidated, more methodologies

have been created by various

standards, and almost all offsets are

now listed on a registry. The era of

selling offsets without veriﬁcation to

a standard is gone. Our respondents

conﬁrmed this trend, and since 2011,

the percentage of respondents who

consider the North American offset

market transparent has grown to 38

percent.

We asked respondents to rank the

value of various project types on 1-5

scale. Most respondents assigned

the highest value to afforestsation,

Carbon 2013

Figure 36: Price expectations for WCI allowances in 2013

Asked to all respondents involved in North American carbon markets. N=317

Figure 35: Carbon leakage as a result of carbon costs?

Asked to WCI compliance entities. N=15

Source: Thomson Reuters Point Carbon

19%

59%

18%

3% 1%

10%

20%

30%

40%

50%

60%

70%

$0-10 (below

auction

reserve price)

$10-15 $15-20 $20-30 $30-40

reforestation, energy efﬁciency

and projects which destroy ozone

depleting substances (ODS).

REDD/avoided deforestation,

enhanced oil recovery, and soil

sequestration were seen as the

least valuable projects.

5. Asia and Oceania

5.1 Australia

Australia’s Carbon Pricing

Mechanism (CPM) came into effect

on 1 July 2012. Regulated entities

must pay a ﬁxed price for their

emissions until 1 July 2015, when

they will enter a “ﬂexible price

period” – a cap-and-trade system.

The potential for a carbon market in

Australia however is uncertain due

to strong political opposition by the

Liberal Party. Led by Tony Abbott,

the party is projected to win the

Australian 2013 general elections in

September.

Figure 37: Price expectations for WCI allowances in 2020

Asked to all respondents involved in North American carbon markets. N=317

13%

53%

27%

10%

20%

30%

40%

50%

60%

$0-17 (below

auction reserve)

$17-30 $30-50 $50-69 $69-87 (Price

Containment

Reserve price)

20%

13%

Have planned to move

production

Already moved

production

Considering moving

production

73% 67%

2012 2013

production

March 2013

Figure 38: Assessing the North American offset market

Share of respondents who agree with the given statements, given as options 4 and 5 on a scale from “strongly disagree” (1)

to “strongly agree” (5). Asked to all respondents involved in North American carbon markets. N=319

Figure 39: Evaluating North American offset types

“How much value, on a scale of 1 to 5, can you assign to offsets from the following project types? Please answer based on

projects originating in North America.” Asked to WCI compliance entities. N=15

50%

43%

25%

43%

39%

30%

55%

45%

38%

10%

20%

30%

40%

50%

60%

The North American

offset market

produces real emission

reductions

The North American

offset market fosters

innovation in emission

reduction methods

The North American

offset market is

transparent

2011

2012

2013

2,3

2,5

2,6

2,8

3,1

3,2

3,4

3,5

0 0,5 1 1,5 2 2,5 3 3,5 4

REDD/Avoided Deforestation

Soil Sequestration

Coal Mine Methane

Enhanced Oil Recovery

Industrial Gases (HFC, SF6, etc.)

Agricultural Methane

Landfill Methane

Ozone Depleting Substances (ODS)

Reforestation

Renewable Energy

Afforestation

Energy Efficiency

Average value from 1 to 5

Source: Thomson Reuters Point Carbon

Carbon 2013

However, most of our respondents

believe the cap-and-trade program

will come into force as planned in

2015. This share of respondents

has declined somewhat to 65

percent from 69 percent a year

ago. Observers who believe the

CPM will not start in 2015 have

also seen their share drop by ﬁve

percentage points to 20 percent.

A higher share of participants,

equal to 15 percent are uncertain,

compared to 6 percent last year.

Repealing the CPM is an ambitious

campaign pledge on behalf of

Abbot. Current polls place him

in the lead for Prime Minister,

but repealing the CPM would

require that his Liberal Party gain

a majority in the Senate as well

as the House of Representatives,

which appears unlikely. A double

dissolution could give Abbott the

power he needs, but such a bold

political move is unfeasible if

September’s election results are

narrow.

Figure 40: Australia’s cap-and-trade programme a fait accompli?

“Do you think the Australian cap-and-trade programme’s “ﬂexible” period

(with a ﬂoating carbon price) will go ahead as planned, and start on 1 July

2015?” Asked to all respondents involved in the Australian carbon market.

N=206

Figure 41: How is your company preparing for Australia’s cap-and-trade programme?

Asked to entities with compliance under the Carbon Pricing Mechanism. N=18

Source: Thomson Reuters Point Carbon

69%

25%

65%

20%

15%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No Don't know

2012

2013

61%

67%

17%

6% 6%

11%

10%

20%

30%

40%

50%

60%

70%

80%

Reducing our

emissions

Preparing to

buy

allowances or

offsets

Investing in

international

offsets (CERs,

ERUs)

Investing in

domestic

offsets

Don't

know/cannot

We have not

started

preparing

Investing in

EUAs

March 2013

Given the regulatory uncertainty

around Australia’s CPM, how do

regulated companies manage

their compliance? A large

majority of participants covered

by the scheme, or 67 percent, are

setting up trading operations for

allowances and offsets. The second

most prominent compliance

strategy is internal abatement.

Some 61 percent or 11 participants

in our sample of regulated entities

say their companies are reducing

or preparing to reduce emissions.

Only a few are directly involved in

purchasing offsets or EUAs. The

rules governing the linkage with

the EU ETS stipulate that entities

can use EUAs for up to 37.5 percent

of their compliance obligation. The

usage of CERs for compliance is

limited to 12.5 percent. There are

no respondents who plan to invest

in these offsets at this time.

Most respondents with a liability

under the CPM, 79 percent, haven’t

considered moving production

abroad because of carbon costs.

The operations of most Australian

emitters, which are tied to the

country’s rich natural resources,

make relocation unlikely. Just two

respondents report having moved

production in 2013.

In 2012, Australia announced it will

forgo its plans to include a price

ﬂoor in its cap-and-trade scheme

to allow it to link with the EU ETS.

The removal of the price ﬂoor could

also facilitate linking with other

CO2 markets. Figure 43 illustrates

our participants’ views on the

potential for linking between

Australia’s ETS and any one of

three other systems - South Korea,

New Zealand, and the WCI market.

The expectations for linking with

New Zealand’s ETS are high,

with the majority of respondents

Figure 42: Carbon leakage in Australia

“Has your company considered moving production out of Australia because

of carbon costs?” Asked to entities with compliance under the Carbon Pricing

Mechanism. N=19

Figure 43: Linking expectations

“Has your company considered moving production out of Australia because

of carbon costs?” Asked to all participants involved in the respective carbon

markets. N=456 (WCI), N=228 (New Zealand), N=240 (South Korea)

84%

6% 3% 0%

79%

5% 0%

11% 5%

10%

20%

30%

40%

50%

60%

70%

80%

90%

No We have

considered to

move

production

We have

planned to

move

production

We have

already moved

production

Don't know

2012

2013

Source: Thomson Reuters Point Carbon

14% 22%

40%

56%

47%

23%

12%

28%

23%

10% 17%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

South Korea New Zealand WCI

Don't know/cannot answer

No, they will not link

Yes, but they will link later

than in 2018

Yes, they will link in 2018

Source: Thomson Reuters Point Carbon

Carbon 2013

anticipating a link before 2018.

A large share of participants, or

47 percent, believes Australia’s

system will link with the WCI

market comprised of California and

Quebec and that such a link will

occur before 2018. Respondents

are the least optimistic about

linking between Australia and

South Korea.

5.2 New Zealand

The New Zealand ETS, which

started operating in 2008,

mandates companies to surrender

New Zealand Units (NZUs) for their

emissions. It is the only mandatory

carbon market to include the

forestry sector, which can act

as a carbon sink by increasing

forest cover and earn NZUs in the

process.

This year’s survey garnered the

views of eight participants in the

New Zealand ETS, down from 19

last year.

In this year’s survey, 19

respondents are companies

covered by the New Zealand ETS,

down from 32 last year.

This year’s results strengthen a

trend observed since last year - an

increasing share of participants

report that emission reductions

have taken place due to the New

Zealand ETS. Similarly, the percent

of respondents who report no

emission reductions has been

decreasing since 2011.

5.3 Korea

The past year was also an

eventful one for carbon markets

in South Korea. On 2 May 2012,

the National Assembly passed a

cap-and-trade bill, with a nearly

unanimous vote. The government

decided on basic market features

and allocated responsibilities to

different governmental agencies

before signing the bill into law

in November. It also set up a

committee to establish design

details such as the cap, allocation

methods, offset use, and banking

and borrowing rules. The deadline

for ﬁnalizing these rules is July

2014. The market is to start

operating in January 2015.

Out of 80 observers surveyed, a

majority believe that the system

will start on time, as shown in

Figure 45. There is a generally

positive attitude towards the

carbon pricing scheme in Korea.

The ETS proposal enjoys strong

support from both the conservative

party in power and the liberal

opposition, who believe an

emission trading scheme will spur

clean-technology innovation.

Observers also believe that it

Figure 44: Impact of the NZ ETS on emission reductions

“To what extent has the New Zealand Emission Trading Scheme (NZ ETS) caused your company to reduce emissions?”

Asked to NZ ETS compliance entities. N=8

Source: Thomson Reuters Point Carbon

16%

22%

47%

16%

26% 26%

32%

16%

25%

38%

25%

13%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Caused

reductions to be

planned but not

yet started

Already caused

emission

reductions in

my company

Has not caused

any emission

reductions in

our company

Don't

know/cannot

answer

2011

2012

2013

March 2013

will also reduce emissions.

An overwhelming majority of

participants, or 74 percent,

believe that the Korean ETS

(KETS) will deliver climate change

mitigation. Korea has pledged to

reduce emissions by 30 percent

compared to business as usual by

2020.

The key concern of the Korean

industry, which is heavily export-

oriented, is whether a cap-and-

trade system will cause them

to lose competitiveness against

rivals from countries with no cap

on emissions. Such a scenario

could lead to carbon leakage

- while reducing emissions at

home, the KETS could cause

relocated companies to increase

emissions elsewhere. Most of

our respondents dismiss such a

scenario, with 62 percent stating

that the KETS will not reduce

industries’ competitiveness.

Some 18 percent believe

competitiveness will be affected,

and 20 percent are uncertain.

Asked what they think a

reasonable price of allowances

would be in 2015, most

respondents with an opinion, or

25 percent, point towards the

$10-14/t range. Therefore, price

expectations of these observers

fall in line with the current price of

allowances in California, a market

of roughly the same size as the

KETS.

Price levels however are too early

to call, as market design rules

have not been ﬁnalized yet. This

explains why just over half of

our respondents do not have an

opinion on what a reasonable

price should be.

Figure 45: Will the South Korean ETS take effect in 2015?

Asked to all respondents involved in the Korean carbon market. N=80

Figure 46: Will the planned ETS reduce emissions in South Korea?

Asked to all respondents involved in the Korean carbon market. N=78

Figure 47: Carbon leakage in South Korea

“Do you think that the KETS will negatively impact Korean industry

competitiveness on international markets?” Asked to all respondents involved

in the Korean carbon market. N=79

66%

19%

15% Yes

Don't know/cannot

answer

Source: Thomson Reuters Point Carbon

74%

10%

15% Yes

Don't know/cannot

answer

62%

18% 20%

10%

20%

30%

40%

50%

60%

70%

No Yes Don't know/cannot answer

74 percent believe the

Korean ETS will reduce

emissions

Carbon 2013

Figure 48: Expectations for the South Korean carbon price in 2015

“What do you think would be a reasonable price for the Korean allowances in 2015?” Price is given on a per ton basis.

Asked to all respondents involved in the Korean carbon market. N=80.

Figure 49a: Towards emission trading in China - a comparison of respondents

“Do you think the seven planned regional pilot emission trading schemes in China will be operational in 2013?” Asked to

all survey respondents. N=1768

4% 8%

25%

6% 5% 1%

51%

10%

20%

30%

40%

50%

60%

₩0-5,000 ($0-

4.5)

₩5,001-

₩10,000 ($4.5-

₩10,001

-15,000

($9-14)

₩15,001

-20,000

($14-18)

₩20,001-25,000

($18-23)

More than

₩25,000 ($23)

Don't

know/cannot

answer

Source: Thomson Reuters Point Carbon

30%

26%

31%

20%

52%

20%

5% 5%

10%

20%

30%

40%

50%

60%

Yes, all of

them

Yes, but only

some of

them

No, but some

of them by

2015

No, none of

them

Don't

know/cannot

answer

All

respondents

Chinese

respondents

March 2013

Figure 49b: Towards emission trading in China - changes from last year

“Do you think the seven planned regional pilot emission trading schemes in China will be operational in 2013?” Asked to

all survey respondents. N=1768

Figure 50: Outlook for a Chinese national ETS

“When do you think China will establish its national ETS?” Asked to all survey participants who expressed an opinion in

the question in Figure 49. N=1219

11%

52%

19% 18%

30% 33% 31%

10%

20%

30%

40%

50%

60%

Yes, all of them Yes, but only

some of them

No, none of them Don't know

2012

2013

Source: Thomson Reuters Point Carbon

Carbon 2013

5.4 China

We asked our survey respondents

about the potential for carbon

markets in China and the most

likely date of implementation.

Figure 49a provides a comparative

view of the results given by all

respondents and those given only

by respondents located in China, a

total of 66 respondents.

Out of all participants, 30 percent

believe that some of the seven

pilot emission trading schemes will

start in 2013. Another 26 percent

believe that none of the pilots will

be ready by 2013, but that some

will become operational in 2015.

In comparison, 70 percent of our

Chinese respondents believe

at least some of the pilots will

begin in this year, which shows

local carbon stakeholders are

much more optimistic about the

prospects of China’s pilot ETSs

than their foreign counterparts.

Figure 49b compares the prospects

for China’s pilot programs to

last year’s results. Notably, the

share of respondents who expect

some regional systems to begin

operating in 2013 has dropped

from 52 percent to 30 percent.

On the prospects of a national

Chinese ETS, as much as 60

percent of our respondents believe

that such a market will take place

by 2020. The expectations of

Chinese respondents are even more

positive as 78 percent foresee a

national Chinese ETS by 2020.

Figure 51: I can’t get no satisfaction

“How satisﬁed are you with the ﬁnal outcome of the Doha Climate Change

Conference (COP-18/CMP-8)?” Asked to all survey respondents. N=1754

Figure 52: What do you expect the overall global policy framework after

2020 to look like?

Asked to all survey respondents. N=1743

Source: Thomson Reuters Point Carbon

21% 21%

13%

22%

39% 32%

26%

72%

41%

47%

60%

10%

20%

30%

40%

50%

60%

70%

80%

Copenhagen,

2009

Cancun, 2010 Durban, 2011 Doha, 2012

Satisfied

Neutral

Dissatisfied

39%

34%

18%

39%

27%

22%

10%

15%

20%

25%

30%

35%

40%

45%

A pledge-and-

review framework,

covering major

emitters

Internationally

binding targets for

major emitters

No framework,

countries fail to

agree

No opinion Other

2012

2013

for the ﬁrst time since

Copenhagen, the

majority of respondents

express dissatisfaction with the

COP outcome

March 2013

Even as most respondents believe

a national ETS will eventually

be in place in China, we believe

the reliability of reported data,

veriﬁcation and enforcement

are still the main challenges to

overcome before China can have a

transparent and liquid market.

6. INTERNATIONAL

NEGOTIATIONS

The key achievement of last year’s

COP in Doha was the decision to

extend the Kyoto Protocol in the

form of a second commitment

period from 2013 to 2020. Parties

in Doha also set the stage for future

negotiations towards a global post-

2020 climate regime, by agreeing

on a timetable towards 2015, the

deadline for reaching a global deal

set.

Since 2009, we have asked carbon

market participants and observers

about their level of satisfaction

with each annual COP. This has

allowed us to build a time series of

satisfaction levels (Figure 51).

This year, the majority of

respondents, or 60 percent, is

dissatisﬁed with the outcome

of Doha’s COP. The level of

dissatisfaction has increased

signiﬁcantly since negotiators

gathered in Durban, by 13

percentage points. Similarly,

the level of satisfaction with

the multilateral climate change

negotiations has fallen by 8

percentage points to 13 percent.

In Durban, negotiators agreed to

put in place by 2015 a “protocol,

another legal instrument or an

agreed outcome with legal force

under the Convention applicable

to all Parties”. This framework

would then be implemented after

2020. The Doha climate summit

elaborated a timeline for reaching

Figure 53: “How likely do you think it is that the new global

agreement (for post-2020) will be decided in 2015?”

Asked to all survey respondents. N=1738

this deal. Parties agreed that a

draft text for the 2020 agreement

should be ready by May 2015 for

ﬁnal adoption by the 2015 COP

(in Paris). How has this impacted

our respondent’s expectations for

a global policy framework post-

2020?

Around one quarter of respondents,

or 27 percent, continues to expect

an international deal on a globally

binding emission reduction

scheme. This group has shrunk

since the Durban climate summit,

when 34 percent believed a global

deal would emerge. Meanwhile,

the share of participants who do

not anticipate a global framework

has edged up to 22 percent, from

18 percent previously. The largest

portion of respondents, or around

39 percent, expects a pledge-

and-review system covering major

emitters, which would represent

a continuation to the current

framework.

Looking at the likely timeline for a

global binding framework, almost

half of respondents, or 46 percent,

believe that the UNFCCC will fail to

reach an agreement by 2015. Only

12 percent of respondents expect

the agreement to be sealed by the

meeting in Paris. Some 35 percent

see an equal probability whether

the deadline will be met or not.

Our respondent’s cautious outlook

reﬂects the very challenging

timeline facing UNFCCC parties.

The agreement to extend the Kyoto

Protocol, a comparatively simpler

task, took seven years. Some

respondents commented that a

vague overall framework may be

agreed in 2015, but that details and

even commitments will be added

later.

Until such a deal emerges, our

respondents suggest a pledge-and-

Source: Thomson Reuters Point Carbon

Carbon 2013

Figure 54: ETSs around the world - Asia steps up

“Which of the countries below will have mandatory cap-and-trade at the national level in 2017?” N=1606

Figure 55: New crediting mechanisms - new opportunities?

“Do you think the following types of credits will become tradable in the coming years?” N=1694

44%

37%

34%

26% 25% 24%

17% 16% 15%

11% 9% 7%

38%

33%

37%

27% 29%

23%

17%

12% 12% 11%

8% 9%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2012

2013

Source: Thomson Reuters Point Carbon

18% 20%

36% 31%

44% 49%

38% 40%

14%

17% 11% 14%

23% 14% 16% 16%

20%

40%

60%

80%

100%

NAMA credits New market

mechanism

credits

Bilateral credits REDD credits

Yes, by 2030

Yes, by 2020

Yes, by 2016

March 2013

review system will likely continue

to govern the world’s mitigation

efforts. Nations will set their

own emission reduction targets

with no legal responsibilities

towards an overarching global

target. Stemming the rise of

global greenhouse gas emissions

will therefore depend on the

emergence of national climate

policies. But how likely are nations

to implement cap-and-trade

schemes in the near future?

Survey participants state that

South Korea and Japan have the

highest probability of enacting

national carbon markets by 2017.

The third most likely host of a

national cap-and-trade measure

in their view is China. Some 33

percent of respondents believe the

world’s largest emitter will put in

place a national emissions trading

scheme by 2017. Canada comes

next (29 percent), followed by

Brazil (27 percent) and the US (23

percent).

Expectations for national CO2

markets have shifted somewhat

since last year’s survey. The share

of respondents who foresee a

national Chinese ETS by 2017 has

fallen by four percentage points,

which likely reﬂects the lack of

progress on market infrastructure

development seen from the

country. Meanwhile, the outlook

for a Canadian ETS has improved,

following the emergence of a

carbon market in Quebec on 1

January 2013. Regarding a US

carbon market, expectations have

remained largely ﬂat.

Despite the implementation of

California’s ETS and President

Obama’s climate change pledge

in his inaugural speech, our

respondents’ views likely reﬂect

the difﬁculties of passing cap-

and-trade legislation through the

currently divided Congress.

In Doha, parties agreed that the

credits from market mechanisms

other than CDM or JI can be used

to meet Kyoto commitments. These

could include credits from reducing

emissions from deforestation

and degradation (REDD), from

so-called “nationally appropriate

mitigation measures” (NAMAs)

in developing countries, and from

bilateral projects ﬁnanced by an

investor country without need for

UN approval. The “new market

mechanisms”, which are still in

early stages of development, could

generate sectoral credits from

reductions below a sector level

emission baseline.

Our survey respondents are most

optimistic for the emergence of

bilateral credits and credits from

REDD activities. REDD is the

most internationally advanced

crediting mechanism to date.

California signed an agreement

with the Brazilian state of Acre and

the Mexican state of Chiapas to

cooperate on generating credits

from avoided deforestation. In

2012, Acre passed legislation on

REDD and collaborated with a

private project developer to issue

the ﬁrst credits from the state in

2013 veriﬁed through the Veriﬁed

Carbon Standard. Japan has also

come a long way in developing its

bilateral crediting mechanism.

Participants are most bearish on

the prospects of credit generation

from NAMAs. Some 18 percent

anticipate such credits by 2016 and

62 percent by 2020. At the same

time, 23 percent do not believe

NAMAs will ever generate credits.

for compliance.

EDITORIAL ENQUIRIES

Emil Dimantchev

emil.dimantchev@thomsonreuters.

com

Tel +47 952 01 355

Fax +47 22 40 53 41

SALES ENQUIRIES

Point Carbon Sales Team

sales@pointcarbon.com

Tel +47 22 40 53 40

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Exploring public opinions on climate change policy in "Big Data Era"—A case study of the European Union Emission Trading System (EU-ETS) based on Twitter

Article

Nov 2021
ENERG POLICY

Public awareness has an important effect on the legislation and implementation of climate change policies. Against the backdrop of the "Big Data Era," social media is an appealing and promising tool for a timely and complete understanding of public perception and attitudes towards climate policies. This paper examines the public's spontaneous attention and awareness about carbon emissions trading (ETS). Tweets related to the EU-ETS, published between 2008 and 2019, were collected for multi-dimensional analysis. Empirical results show several important findings. First, public attention on the EU-ETS has increased significantly since 2011. Second, government officials and industry practitioners have a stronger influence in the discussions than the public and industrial enterprises. Third, topic followers mostly gathered in Belgium (16.65%), the UK (11.6%), and some non-regulated countries like the US and Australia. Fourth, the public mainly focused on the policies and legislation, allowance price, and allocation. The innovation of this study rests in the development of a social media data-based research framework to examine the public's cognition of climate policies, which integrates the advantages of public social media, social network analysis, and text topic analysis. This study provides comprehensive analysis and support for climate policy implementation and public acceptance improvement.

ResearchGate has not been able to resolve any references for this publication.

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