The World Bank Group’s Networked Carbon Markets initiative has been working with civil society, governments and the private sector to explore alternative visions for how a future international carbon market could accommodate a “patchwork” of different domestic climate actions.

The initiative’s focus is to facilitate cross-border trade based on a shared understanding of the relative value of different actions. This is to enable more countries to participate in a liquid and scalable international carbon market, while still preserving the environmental integrity of the trade.

Climate Strategies published a working paper for this initiative, looking at existing and future climate clubs or club-like arrangements, which bring together groups of national Governments, cities and other sub-national jurisdictions, and business organisations, in pursuit of joint plans for climate change mitigation, and also adaptation.

It considers how these climate clubs might adopt emissions trading or develop into carbon markets. It analyses how these Carbon Market Clubs (CMCs) can be compatible with, and could assist the development of, climate clubs.

The concept of CMCs is still evolving. Preliminary analysis suggests that key aspects of the Paris Agreement can be seen as fostering new opportunities for the creation of novel international institutional modalities such as CMCs.

Written by Thomas Brewer, Henry Derwent and Andrzej Blachowicz on behalf of Climate Strategies, with contributions from Michael Grubb, Germana Canzi and Eleonora Arcese.