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 [email protected]
Environmental Market Policy Priorities
Adopt Market-Based Accounting
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
2. Use EACs to track target achievement and deliver production-based financial incentives.
3. Allow pricing to float to harness financial market innovation.
Environmental Market Design Principles
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
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