Key facts
- China and Europe are forming an alliance to strengthen cooperation on carbon pricing systems.
- The alliance aims to improve compatibility and cooperation between emissions trading systems.
- The initiative contrasts with the US approach of prioritizing fossil fuel expansion.
- Carbon pricing is a tool to reduce greenhouse gas emissions by placing a cost on CO2 emitted.
China and Europe have formed an alliance to strengthen cooperation on carbon pricing systems, a move that highlights a growing divergence in global climate policy compared to the United States. The coalition, announced in Florence, aims to improve coordination between major emissions trading systems and enhance transparency.
Adair Turner, co-chair of the Energy Transitions Commission, suggested that China and Europe should jointly introduce a system similar to the Carbon Border Adjustment Mechanism (CBAM), a levy on carbon-intensive imports. This initiative seeks to reduce fragmentation and improve compatibility between existing carbon markets.
The alliance includes the EU, China, and Brazil as chairs, with the UK, Canada, France, Turkey, New Zealand, and Germany also joining. Sub-national jurisdictions like California and Quebec can participate as observers. This contrasts with the US administration's focus on fossil fuel expansion.