EU and Brazil Establish Open Coalition on Compliance Carbon Markets

The EU and Brazil have launched the Open Coalition on Compliance Carbon Markets to harmonize and link national carbon markets. This initiative was announced during a World Leaders Summit held in Belém, which preceded the COP30 meeting. The coalition aims to enhance carbon pricing and market mechanisms, both of which are deemed essential for achieving climate goals and implementing the Nationally Determined Contributions (NDCs) outlined in the Paris Agreement.

Ursula von der Leyen, President of the European Commission, remarked that carbon pricing “has become a central tool to reduce greenhouse gas emissions with a strong business case for the economy and for the people,” stressing the importance of “gathering” and “encouraging” other nations to adopt national compliance measures and join the market. Brazilian President Luiz Inácio Lula da Silva asserted that “carbon markets can generate high public revenue,” he emphasized the necessity of “providing common standards, equitable environmental rules, and improved climate finance methodologies.”

To date, the coalition has garnered endorsements from 11 countries, including the UK, Canada, France, Germany, Mexico, and Zambia, and continues to invite additional signatories. This collaboration aims to enhance the ambition, effectiveness, and equity of compliance carbon markets while maintaining environmental integrity and ensuring a just transition.

Currently, there are 80 carbon pricing instruments in operation across 50 countries, encompassing 28-30% of global greenhouse gas emissions. The EU Emissions Trading System has been active for 20 years, achieving a 50% reduction in emissions within the Trading System sectors compared to 2005 levels, while generating over €250 billion in revenues that have financed climate initiatives, including renewable energy, energy efficiency, and low-emission transport. The formation of the Open Coalition is a definitive indication of multilateral cooperation in employing market-based mechanisms to combat climate change.