Description
Financial resources can be made available to cities for climate action by participation in international or national emissions trading schemes (ETS).
Instrument category
National government transfers
Implementation status
Moderate - tried and tested
Enabling conditions and success factors
- The city must be part of a country or region implementing an ETS.
- It is usually the case that projects funded by revenue from ETS must be able to prove how effective they will mitigate carbon emissions.
Instrument benefits
- There are rapidly increasing revenues available from ETS. For example, potential EU ETS auctioning revenues for Romania could amount to around EUR 4 billion per year by 2030, up from around EUR 100 million in 2020.
Challenges and risks to implementation
- A lack of transparency between Federal and state governments (or central and local governments) and a flawed accountability system are usually the greatest challenges.
References
https://ec.europa.eu/clima/policies/ets_en https://unfccc.int/process/the-kyoto-protocol/mechanisms/emissions-trading https://www.iea.org/reports/chinas-emissions-trading-scheme https://blogs.worldbank.org/climatechange/new-bike-lanes-and-metro-stations-bucharest-paid-carbon-creditsCase studies
Contribution of carbon credits to pay for green transport improvements in Bucharest, Romania
View case study