The European Union has placed a lot of faith in the success of its emissions-trading scheme to lower CO2 emissions but market mechanisms such as this depend on trust and confidence, the report points out. Thus, any widespread or systemic failure, as a result of deficient monitoring and reporting, flawed compliance processes or fraud, could undermine confidence in markets and regulation and jeopardise the crucial policy goals that they are designed to address, according to the report.
Key to building trust, the authors say, are the three central criteria of transparency, accountability and integrity. The PricewaterhouseCoopers report looks at how the patchwork of trading schemes that are emerging around the globe stacks up against these criteria. Despite good intentions across the board, the report paints a general picture of new and immature markets, inconsistent and complex compliance frameworks and risk.
PricewaterhouseCoopers make the case for urgent and co-ordinated action to develop a framework of generally accepted principles and practice that will underpin trust and efficiency in these new markets - in effect, "a new Global Emissions Compliance Language".
