Seize the business opportunities in the budding US carbon market

Dr. Martin Bergfelder, Project Manager, International Carbon Action Partnership (ICAP)

What do you and your organization do in the Carbon Markets sector?

The International Carbon Action Partnership (ICAP) is made up of countries and regions that are actively pursuing the development of carbon markets through implementation of mandatory cap and trade systems. ICAP provides the opportunity for members to share best practice and learn from each others' experiences. As a result, ICAP will facilitate future linking of cap and trade systems. I am the Project Manager of ICAP.

What do you consider to be the most interesting developments and biggest challenges in the North American carbon market at this time?

The development of cap and trade systems at state level (RGGI, WCI) and the increasing political support for a federal system. The biggest challenge is to make sure that those cap and trade systems, especially at the Federal level are designed in a way that takes the international developments into account and thereby facilitates future linking with other systems to create a global carbon market.

If regulated emission reductions become mandatory in the US, who stands to be most affected by this, and what would you recommend to anyone worried about impending legislation?

This depends on the sectors covered by future regulation. Prices will represent climate impact and hence low carbon production and activities will profit most while high carbon products will bear additional costs.

This will give investment incentives to low carbon technologies and shifts financial resources. If you are worried about impending legislation, try to push for an Federal approach that is in line with the international developments to create a level playing field.

How do you see the North American Carbon Market looking in 5 years' time?

A federal cap and trade system has created the largest domestic Carbon Market in the world, linked to other cap and trade system such as the EU ETS and thereby forming a central pillar of a truly global Carbon Market.

What do you see as key to building a truly global carbon market?

Trust amongst governments and market participants in the environmental integrity of the system and the robustness of the caps. Government intervention in the market needs to be avoided. Governments need to provide long term signals to shift private investment on the scale required into low carbon development worldwide.