Representative leadership of the Paris Agreement 2015 plays pivotal roles at today’s global sustainable frontiers, especially in advancing long-term ambition with shared forward-looking purposes at exacerbating causes of the ongoing climate transition. Considering such perspective, reciprocal collaboration on a global scale undoubtedly lies at heart, notably on broader shared premises of intended nationally determined contributions (NDCs), but more importantly also in stewardship of value-creation dialogs mutually reinforcing on the highground of carbon emissions trade systems. Establishment of globally interconnected trade systems is unequivocally an imperative notably in substantiation of merit-based decision, while critically also making sense of investment, development and finance with conducive market and non-market mechanisms, all on shared forward-looking transformation and transition at climate cause in the long run.

1. Edition: November 24, 2022 Bangkok, Thailand / Page 1 (5)
Foundation of Global Carbon Markets
Lead value-driven climate and net-zero transition on shared premises of
interconnected international carbon trade systems
Siripong Treetasanatavorn
Sloan Fellow, Massachusetts Institute of Technology
A. Position carbon trade narrative on the highground of global climate transition:
• Representative leadership of the Paris Agreement 2015 plays pivotal roles at
today’s global sustainable frontiers, especially in advancing long-term ambition
with shared forward-looking purposes at exacerbating causes of the ongoing
climate transition. Considering such perspective, reciprocal collaboration on a
global scale undoubtedly lies at heart, notably on broader shared premises of
intended nationally determined contributions (NDCs), but more importantly also
in stewardship of value-creation dialogs mutually reinforcing on the highground
of carbon emissions trade systems.1
Establishment of globally interconnected
trade systems is unequivocally an imperative notably in substantiation of merit-
based decision, while critically also making sense of investment, development
and finance with conducive market and non-market mechanisms, all on shared
forward-looking transformation and transition at climate cause in the long run
(see Table for an overview of this article with three-pronged recommendations).
B. Make sense of carbon trade integration with a whole-of-ecosystem approach:
• Joint mechanism for trade integration lies at heart of the global partnership
dialog, essentially grounded on a rule-based multilateral resolution-finding and
decision-making framework that leads to fair, accountable and forward-looking
outcomes for all parties. Accountable climate transition with achievable targets
that substantiate shared global and national ambition is an imperative,2
but
achievement on the premise of such forward-looking view only comes together
in a common operational and governance framework that all trade partners
agree upon (see precedent of clean development mechanisms and common
time frame from COP263
). But merit-based trade integration across the globe
further also requires deliberate decision-making process that resonates smart
transition choices with reinforcing incentive on an international level, notably in
resonance with shared accountability on an achievable transition pathway (see
sense-making roles of global carbon price in dynamics of net-zero transition4
).
• Credibility of achievable net-zero ambition further underlines significance of
strategy/governance implications on the foundation of merit-based assessment
for each specific carbon asset in question. Undoubtedly, valuation premises of
the associated diligence process are required first and foremost not just in price
dynamics at the demand-supply equilibrium from perspective of the short-run
transition only. But forward-looking market expectation can only be engaged,
stipulated therefore anchored once establishing climate and net-zero market
and policy decision framework on the premise of broader confidence-building
measures, particularly conducive to accountability therefore credibility over the
mid- to long term (see discussion on how to anchor price and price expectation

2. S. Treetasanatavorn. Foundation of Global Carbon Markets
Bangkok, Thailand / Page 2 (5) Edition: November 24, 2022
Exhibit: State of international global emissions trading system considering in particular leadership roles
from North America, Europe and PR China (all in blue) with emerging roles from Brazil, Japan and
South East Asia (in yellow and green), Source: ICAP - International Carbon Action Partnership (2022).

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with the analogy of flattening of the Phillips curve as argued by the G305
). Such
is how to turn around credibility challenges at today’s crisis situation in forward-
looking ambition for price equilibrium, essentially in the narrative of accountable
and achievable net-zero ambition in commensuration with market expectation.6
C. Integrate carbon market to broader trade and development at sustainable causes:
• Merit-based transition of the value ecosystem is therefore indispensable to
forward-looking outlook of the transformation narrative, particularly in advocacy
and stewardship of rational market and policy decision on shared premises of
trade, finance and development. Climate finance guided by carbon pricing is
undoubtedly a game-changing precedent not just from perspective of avoided
carbon emissions but also as seeds of broader ecosystem transition essentially
at frontier markets (see precedent of climate finance and carbon pricing as joint
value-creating mechanisms at the World Bank7
). But corresponding signaling
impact driven by voluntary market mechanism in the carbon market additionally
helps overcome asymmetric information,8
thereby opening up a much-needed
dialog on the premise of merit-based risk allocation, notably in most important
green-field projects across the Global South (see Exhibit for the state of 2022’s
global carbon markets, also in the reference9
). Emissions trade and associated
trade and development premises in this sense therefore play a pivotal sense-
making role in transformation of merit-based ecosystem decision at causes.
• Pivot of broad-based informed decision shall after all define topmost priority
at today’s crossroads, particularly in substantiation of carbon market but more
importantly also in broader assessment of net-zero transition in the big picture.
Increasing acceptance of international carbon emissions market unmistakably
underlines broader awareness of climate-related risk mitigation and adaptation
as an emerging frontier of post-crisis value-creating platform.10
Engagement on
such premises however also requires broader decision-making framework that
takes account of commensurate risk mitigation and adaptation mechanisms,
while also balancing risks and opportunities on both asset and portfolio levels,11
thereby making sense of a whole-of-economy transition in the narrative of 1.5C
ambition over the long run. On this premise, representative call of the nationally
determined contributions shall become meaningful and forward-looking once
mutually reinforcing net-zero achievement with joint ambition across market,
economy and society on the shared highground with all stakeholders as one.12
Discussion notes:
1. See substantive premises of this argument from Article 6 (architecture and underlying mechanisms of the “Paris
Rulebook” as stipulated at COP24 Katowice and promulgated at COP26 Glasgow) from the Paris Agreement at
UNFCCC (2015): https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
2. See significance of setting climate targets and implications of emissions trade at London School of Economics’
Grantham Research Institute (2018): https://www.lse.ac.uk/granthaminstitute/publication/targets/
3. See substantive discussion of the agreed-upon mechanisms as the foundation of global carbon emissions trade
from COP26/UK Government (2021): https://ukcop26.org/wp-content/uploads/2021/11/COP26-Negotiations-
Explained.pdf
4. See latest update from the World Bank Group (2022) regarding the state of global carbon market especially
from perspective of trade price and pricing mechanisms at
https://openknowledge.worldbank.org/handle/10986/37455
5. See imperative of price expectation and the implications of confidence-building measures from the Group of
Thirty (2020): https://group30.org/images/uploads/publications/G30_Mainstreaming_the_Transition_to_a_Net-
Zero_Economy.pdf
6. See implications of asymmetric information and how to embrace such challenges on the highground of the
Economic Nobel Prizes (2016): https://www.nobelprize.org/prizes/economic-sciences/2016/advanced-
information/

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Table: Most critical priorities on the foundation of global carbon markets in (A) representative strategic
pivot narrative, (B) orchestrating value-enabling decision and (C) leadership of a whole-of-economy
transition, all in broader views of how to make sense of decision priorities at today’s crisis crossroads.

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7. See implications of this discussion particularly in the sense of how to advance ecosystem impact as discussed
by the World Bank Group (2019):
https://documents1.worldbank.org/curated/en/808771566321852359/pdf/Financing-Low-Carbon-Transitions-
through-Carbon-Pricing-and-Green-Bonds.pdf
8. See arguments why overcoming asymmetric information matters to rational market and economic decision but
also how signaling impact makes a difference in this context from the Economic Nobel Prizes (2001):
https://www.nobelprize.org/prizes/economic-sciences/2001/press-release/
9. Refer to 2022’s report from emissions trading worldwide at the International Carbon Action Partnership (2022):
https://icapcarbonaction.com/en/publications/emissions-trading-worldwide-2022-icap-status-report
10. See implications of forward-looking proposition of carbon markets and value-creating implications over the long
run at McKinsey & Company (2021): https://www.mckinsey.com/capabilities/sustainability/our-insights/putting-
carbon-markets-to-work-on-the-path-to-net-zero
11. See discussion regarding significance of risk assessment and allocation in broader climate transition framework
as discussed by BlackRock Investment Institute (2016):
https://www.blackrock.com/ca/institutional/en/insights/blackrock-investment-institute/climate-change
12. See broader leadership view of the climate transition in driving context of stakeholder engagement at today’s
complex transition at World Economic Forum (2021): https://www.weforum.org/about/book