ENVIRONMENTAL MARKETS ASSOCIATION Resources

EMA Market Policy Priorities

On March 4, 2024, the Board of the Environmental Markets Association (EMA) unanimously voted to approve the following Market Policy Priorities. EMA's position and mission is to promote open, competitive, and tradable market-based solutions and these policy priorities aim to address barriers and threats to the continued use and expansion of Environmental Commodity Instruments.

Members and supporters of EMA are invited to download and use the following resources for education, promotion and advocacy purposes. In the event that the content is changed, EMA requests the opportunity to review the modified documents. Please submit your requested changes to policy@enviromarkets.org

Environmental Market Policy Priorities

Environmental markets are a proven and successful tool for solving economic externalities. Well-designed markets support efficient, cost-effective, and growth-oriented investment into sustainable development and climate action. EMA’s policy priorities improve the efficacy of market-based solutions and will harness larger, deeper capital pools for achieving sustainability targets while promoting economic development.

Adopt Market-Based Accounting

1. Allow purchases of environmental attribute certificates (EACs) to count towards environmental targets and net-zero goals.

2. Deploy “all-attribute” tracking systems and create accurate Residual Mix data.

3. Use a Complete Attribute Accounting Framework = Total Market-Based Accounting (Mandatory + Voluntary Purchases) + Residual Mix (i.e. the allocation of dirty/fossil-rate attributes to the non-purchaser).

4. Harmonize the tracking and reporting of Compliance, Voluntary, and International targets.

Utilize Tradable Instruments

1. Allow for decoupling and trade of environmental attribute certificates (EACs) from the underlying physical commodity or activity.

2. Use EACs to track target achievement and deliver production-based financial incentives.
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3. Allow pricing to float to harness financial market innovation.

Learn more about Market-Based Accounting Utilizing Tradable Environmental Attribute Certificates (EACs) with this EMA resource:

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Environmental Market Design Principles

EMA’s mission is to promote open, competitive, and tradable market-based solutions that utilize environmental attribute certificates (EACs) to solve environmental challenges and foster investment into sustainable development.

Open

Non-discriminatory market access to production-based incentives

Competitive

Producer and consumer procurement/compliance choice

Tradeable

Floating, market-determined pricing and investment signals via environmental commodity instruments

Environmental Market Design Principles

1. Tradeable Environmental Instruments
2. Market-Determined Pricing
3. Market Design that Fosters Transparency, Competition, Liquidity and Innovation
4. Market Oversight
5. Market Integrity and Stability

Advantages of Well-Designed Market-Based Solutions

Accountable Environmental Policy Objectives
Cost-Effective Sustainability Target Achievement

Environmental Target Achievement

Effective market-based mechanism design facilitates the achievement of targets required in timeframes.

Cost-Effectiveness

Well-designed markets deliver results through the efficient deployment of low-cost solutions.

Economic Development

Highly compatible, growth-oriented policies that legerage private investment at private risk into real physical assets, infrastructure, and technology.

Features of Well-Designed Market-Based Mechanisms

Private Investment at Private Risk
Pricing & Program Transparency
Risk Mitigation/Transference
Compliance/Procurement Flexibility
Consumer & Ratepayer Protection
Buyer Preference Accommodation (e.g. Technology, Location, Granularity, Vintage, etc)

Diverse Participant Bases
Information Feedback Signals
Investor Confidence
Market Efficiency & Liquidity
Lower Costs of Capital
Financial & Technological Innovation

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