CARBON FINANCE093Below: Henry DerwentEurope's carbon market has proven itself robust anddemonstrated the ability of cap-and-trade to produceemissions reductions. Tangential issues related toregistry security and the potential for fraud should notdistract from the progress that has been made, and thecommitment to drive forward with further progress.In the United States, California has progressed towardscreating the second largest carbon market in the world.In the absence of federal cap-and-trade legislation, the"golden state" has taken the initiative to constrain itsCO2 emissions. IETA is involved in consultation with the Californianauthorities to improve the market design, leveragingthe expertise of our diverse membership. Regulationsare in the later stages of development, and IETA hasmade significant progress in addressing the issues thatcan impede market functionality. On the other side of the US there is the RegionalGreenhouse Gas Initiative (RGGI), which is the mainlever for emissions reductions for many northeasternstates. IETA is involved in the discourse regarding thefuture of RGGI, and the potential for a more ambitiousscheme to emerge in the years to come. Canadian Provinces are acting as well, with emissionstrading schemes developing in British Columbia andOntario as part of the Western Climate Initiative (WCI),and a long-standing scheme in Alberta.Further afield, cap-and-trade continues to progress inNew Zealand and South Korea with national initiativesthat introduce flexibility and trading to produceeffective emissions reductions. The areas of the worldthat are unwilling to wait for a "grand bargain" onnational or international climate policy are movingtowards market-mechanisms and emissions trading astheir policy of choice. In one emerging market after another, the idea ofmarkets as a lever to achieve reductions in emissionsand energy use is spreading, regardless of theuncertain climate that surrounds COP17 and theUNFCCC process. While Europe may have been distracted by theconsequences of poor registry design, and the UnitedStates may have become disengaged from the premisefor any climate policies, countries such as India, Chinaand Brazil are investigating and experimenting in usingmarkets to provide environmental solutions based onthe merits, not the politics, of the argument - anargument that IETA will persist in promoting. nABOUT THE AUTHORHenry Derwent is President and CEO of theInternational Emissions Trading Association - theoldest and largest non-profit membershiporganisation of companies with an interest in carbonpricing, from many countries and economic sectors. Before joining IETA in 2008, for over ten years MrDerwent had been responsible for international anddomestic climate policy, sustainable energy, airquality and other environmental and energy issues inthe UK Government. Before that he was a corporatefinance executive in a major investment bank,working on public-private partnerships.

hile many of us are pessimistic aboutthe likelihood that a new global accordon climate change will emerge toreplace the Kyoto Protocol (with largeemitters like Canada and the US retreating from thedevelopment of national programmes), we havemany reasons to be optimistic about the potential forurban and regional approaches to succeed. There is plenty of evidence that non-state actors -companies, NGOs and public institutions - arerushing in to fill the void left by the political impasseon climate change at the national level in manycountries. This multi-level and multi-stakeholderplatform is more flexible, resilient and effective thanstale international relations. A grand and ambitiousclimate policy experiment in British Columbia,Canada, over the last three years exemplifies how asmall jurisdiction can both enact meaningful climatepolicy and demonstrate how a wide constituencyfrom citizens to companies can respond to the newopportunities it creates. More than fifty per cent of the world's populationnow lives in cities so leadership from urban centresand regions under the C40 Cities and R20 Regionsof Climate Action initiatives gives us cause foroptimism. Just as Finland showed how a smallcountry can become a world leader in technology,British Columbia has shown how, in three years, aregion can leap to the front of the climate policypack. Beginning in 2008, the Province implementeda wide range of policies to create a revenue-neutralcarbon tax, committed to carbon-neutral governmentoperations and regulations that tackle emissionsfrom vehicles, buildings and landfill gas sites. TheProvince also ensured that the investmentenvironment for clean technology would capitaliseon natural resource endowments through a bioenergystrategy and tax and venture capital programmesthat create strong conditions for growth. Revenues from the clean technology sector hadgrown to $2.5bn by 2010; while that amount isdwarfed by investment by countries like China, theProvince has established itself as one of the mostvibrant clean technology innovation hubs in theworld and the businesses that succeed there arepoised to take on export markets. Companies likeOffsetters have emerged as innovative leaders incarbon management in North America, in responseto the new opportunities created by policymakers. Successful climate policy not only requirescomprehensive and intelligent policy design; thegreatest barrier to progress in the low-carboneconomy is social acceptance of new policy andtechnologies. The greatest opportunity to show theworld how new buildings and transportation systemsnot only reduce emissions but also improve quality oflife was the Vancouver 2010 Olympic Winter Games.Not only was it the greenest Games in history, it wasalso the first carbon-neutral Olympics. Offsetters, in collaboration with the VancouverOrganising Committee, worked closely to offset thedirect emissions of the Games and to engagespectators, athletes, sponsors and partners tounderstand their carbon footprint as part of theindirect emissions associated with the Games. The aim was to reduce that footprint where possible, and finally, to offset those emissions that could not be reduced. As a result, three billion viewers and hundreds of thousands of guests witnessed how investment in low-carbon infrastructure Above: Aerial view of theCampus of University ofBritish ColumbiaRight: Dr James Tansey,CEO and Founder ofOffsettersBRITISHCOLUMBIAAS ACLIMATE CHANGE INNOVATIONLABORATORY094CARBON FINANCEDR JAMES TANSEY, CEO AND FOUNDER, OFFSETTERSASSOCIATE PROFESSOR, SAUDER SCHOOL OF BUSINESS, UNIVERSITY OF BRITISH COLUMBIAEXECUTIVE DIRECTOR OF ISIS, THE SAUDER SCHOOL OF BUSINESS W