We would like to thank our Partner Sponsors

We would like to thank our Partner Sponsors:

IETA 2020 GHG Market Sentiment Survey Launch Dirk Forrister Stefano De Clara Ian Milborrow Ella Sexton Oliver Willmott CEO and President IETA Director, International Policy IETA Partner, Sustainability Pw. C Sustainability & Climate Change Consultant Pw. C Senior Manager, Sustainability & Climate Change Pw. C Federico Di Credico Lisa De. Marco Africa Abajas Maria Carvalho Alex Rau Managing Director ACT Commodities Senior Partner De. Marco Allan LLP Head of Aviation Services Vertis Environmental Finance Senior Consultant South Pole Managing Member Environmental Commodity Partners

Carbon markets and climate policy: The latest trends and developments in 2020. IETA Live: 2020 GHG Market Sentiment Survey Launch 23. 06. 20 Conducted by

IETA’s 15 th GHG Market Sentiment Survey * 137 responses from IETA members * 22 responses from IATA members * Responses collected from 1 April – 24 April * Sample covers many types of carbon market players and geographies * Expert panel from industry, finance and voluntary markets provided quotes when responding to survey

This year’s highlights * Expected prices for all Emissions Trading Systems (ETS) decreased compared to last year * Voluntary corporate climate pledges have increased, driven by investor and consumer pressure * COVID-19 will have a significant negative impact on the pilot phase of CORSIA By when do you expect the following countries to launch an operational ETS? In what timeframe do you expect carbon trading (covering the power sector) to emerge in China’s national ETS?

Price expectations lowered across markets, compared to last year’s survey What do you expect the average carbon price to be for each of the following ETSs in the periods 2020 and 2021 -2030?

COVID-19 affects confidence in EU ETS price Average carbon price expectations for the EU ETS over successive surveys

Business is supportive of a Carbon Border Adjustment Mechanism By when do you think the EU is likely to implement a Carbon Border Adjustment Mechanism? CBAM * 55% of respondents agreed that a Carbon Border Adjustment Mechanism (CBAM) should be introduced as an alternative to free allocation to sectors at risk of carbon leakage * * A further 21% think that both measures are needed * Most (41%) thought that the CBAM would likely come into effect beyond 2024 The CBAM is not expected to come into force soon; only 8% selected it as a near-term climate policy priority

2030 Climate Target and European Climate Law should be EU climate policy priorities In your opinion, what should be the current climate policy priority for the EU? * The European Climate Law aims to enshrine in law the goal set out in the European Green Deal: for Europe’s economy and society to become climateneutral by 2050 * EU’s current 2030 climate target stands at a 40% reduction in GHG emissions compared to 1990 levels. * Most survey respondents expect the target to be increased to 50%, whilst 21% expect that it will not be increased at all

Voluntary corporate commitments on the rise What are the most important drivers of voluntary corporate action on climate change? * 2/3 rds of survey participants have a long-term emissions reduction goal or will have one by the end of this year * 84% intend to use carbon credits as part of their climate strategy * 60% think the voluntary market can accommodate the rise in pledges

CORSIA will be significantly impacted by COVID-19 in the pilot phase Do you believe that the anticipated drop in emissions due to COVID-19 during the 2020 baseline measurement period will negatively affect the implementation of CORSIA?

Achieving investment in Natural Climate Solutions at scale What do you consider to be the main barriers to investment in NCS at scale? * Barriers: key barriers identified were a perceived concerns around environmental integrity and lack of recognition in compliance systems * NDCs: NCS will remain a prominent feature of NDCs * EU: 73% of respondents think that NCS should play a role in delivering the EU’s current climate strategy

North America * US election: Most voters think that climate will be important to some voters. Only 4% do not think that climate will be an important voting issue at all * Private sector action in the US: Driven primarily by state regulation, followed by federal regulation * Private sector action in Canada: Action on climate is driven by federal regulation, followed by provincial regulation * Challenges in Canada: operationalising the pan-Canadian offsets programme To what extent do you believe that climate will be an important voting issue in the 2020 US presidential election? Climate will be;

Political instability challenges Latin American markets Which two of the following pose the biggest challenge to the future implementation of ETS in Latin America in the coming years? * Challenges: Political instability a clear concern across the region * Mexico: Next development in Mexico’s market will be confirmation of the offsets that will be eligible for compliance * Emerging markets: Next compliance systems in Latin America will emerge in Colombia, Chile and Argentina between 2022 - 2026

Potential economic downturn a key hurdle for China’s ETS Which two of the following do you believe pose the biggest challenge to the future implementation of the Chinese ETS in the coming years? * The number of respondents who believe China’s national ETS will be operational by 2021 has halved since last year, returning to 2018 levels. * 34% believe it will be operational in 2021, and 34% believe it will be operational in 2022 * Most think that potential economic downturn is the biggest hurdle, followed by finalising power market reform

Conclusions Key findings: * Expected prices for all Emissions Trading Systems (ETS) decreased compared to last year * Voluntary corporate climate pledges have increased, driven by investor and consumer pressure * COVID-19 will have a significant negative impact on the pilot phase of CORSIA

Thank you! Conducted by

IETA 2020 GHG Market Sentiment Survey Launch Dirk Forrister Stefano De Clara Ian Milborrow Ella Sexton Oliver Willmott CEO and President IETA Director, International Policy IETA Partner, Sustainability Pw. C Sustainability & Climate Change Consultant Pw. C Senior Manager, Sustainability & Climate Change Pw. C Federico Di Credico Lisa De. Marco Africa Abajas Maria Carvalho Alex Rau Managing Director ACT Commodities Senior Partner De. Marco Allan LLP Head of Aviation Services Vertis Environmental Finance Senior Consultant South Pole Managing Member Environmental Commodity Partners

We would like to thank our Partner Sponsors: