06/11/2009 18:10

Responding to recent debate on the role of carbon markets, Richard Gledhill, global leader, PricewaterhouseCoopers Climate Change and Carbon Markets said:

"Questioning the role of carbon markets now will make it harder to deliver a global deal on climate change and delay investment. Markets give business the incentive to act on climate change.

"Questioning the effectivess and stability of carbon markets at this stage of the UN climate negotiations is an unhelpful distraction and could undermine business confidence in climate policy which is critical to delivering the scale of investment required to transition to a low carbon economy.

"Carbon markets provide the price signal to business and the incentive to respond and invest. Secondary trading is a sign that the markets are working, not a cause for concern; market intermediaries help make the link between investors and projects which reduce emissions.

"As with any market, carbon markets need depth, liquidity and integrity, backed by robust rules on monitoring, reporting and compliance. But the key issue is the ambition of the reduction targets.

"First and foremost, markets should be judged on whether industry is meeting the emissions reduction targets set by regulators - and on this point they are clearly a success. Up to 2008, the EU ETS doubled in size every year, demonstrating this is a credible tool in tackling emission growth and finding the lowest cost emissions reductions, particularly in the electricity generation industry.

"It would be a backwards step to change track now on carbon markets in the run up to a Copenhagen deal, when there is increasing evidence that carbon markets are driving private sector investment in reducing carbon emissions. But we need to recognise that they are not the only tool in the box. Carbon markets are well suited to industrial emitters, but taxes or standards can be more important in driving consumer behaviour and energy efficiency in homes and cars.

"We shouldn't be afraid of a profit motive to drive business engagement in tackling climate change, provided it's balanced with the right structure, regulation and incentives.

1. Richard Gledhill, or Jonathan Grant from PwC's Climate Change and Carbon Market team are available for interview or further comment. Contact Rowena Mearley T: 07841 563 180 for information.

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