Linking the emissions trading system in the EU and California leads to several benefits, and the difficulties that exist can be solved with a dose of political will. This is the conclusion in a new study published by the thinktank FORES and IVL, the Swedish Environmental Research Institute.

Europe’s system for emissions trading, EU ETS, is the biggest in the world and regulates half of Europe’s emissions. Around the world similar systems are established, among others in California. By linking different systems, the market grows and the emissions can be reduced in a more cost-effective way, as more cheap emissions reductions are made available.

-the EU has a confirmed goal of linking EU ETS with other emission trading systems. In August, EU announced its plans of linking with Australia’s emissions trading market, starting in 2015. To extend its market to encompass California would be a very positive thing says Lars Zetterberg who has written the report ”Linking the Emissions Trading Systems in EU and California”.

According to Zetterberg, there are a number of technical difficulties facing a linking of the two systems, especially concerning what emissions reductions outside the system can be included. In the EU, actors can include emission reduction, which are a result of projects in low-income countries. In California, actors can include forest credits.

-A problem arises when both types of credits are accredited in both systems when they are linked. Nevertheless, this can be solved if there is political will to do so. In several other important aspects, the two systems are similar, Zetterberg continues.

-When the international climate negotiations are not showing any signs of success in the near future, it becomes even more important to investigate other possibilities to take a step further. If the EU can link its emissions trading scheme with California’s, it would be a great leap towards a global price on carbon dioxide, says Martin Ådahl, director of FORES.