Important aspects of sinks for linking emission trading systems

The choice of appropriate strategies for the protection of forests and other carbon storing ecosystems is currently a lively debate in international climate policy. One proposed strategy involves the inclusion of so-called "carbon sinks" into emissions trading, but this idea is complex and brings up a variety of issues that will affect the likeliness of linking national and regional emission trading schemes (ETS) in the future. To aid in the debate, the German Federal Environmental Office has published a study on "important aspects of sinks for linking emission trading systems" edited by adelphi.

How to ensure that the inclusion of the LULUCF sector (landuse, landuse change, and forests) in national and regional ETS does not threaten environmental effectiveness or disrupt functioning emission trading as a whole? This and other questions are addressed by adelphi’s new study developed for the German Federal Environmental Agency (UBA), which provides analysis and evaluation of topics such as permanence of CO2 storage in forests, the uncertainty of calculations with regard to sinking capacities of ecosystems, and the impact of REDD+ (Reducing Emissions from Deforestation and Forest Degradation).

The study’s authors, Simon Hirsbrunner, Dennis Tänzler, and Lena Reuster, compare the approaches of the different existing and planned ETS in dealing with carbon sinks. This analysis discloses a high heterogeneity of existing rules dealing with sinks in emission trading and highlights the challenges that come with it for a possible linking of different ETS in the future. Last but not least, the study discusses alternative methods of addressing these challenges (harmonization of standards, exchange rates, etc.) and overcoming the barriers to linking different ETS.