Answer extracted from the SmarterMarkets podcast — listen to the full episode below.
Which international coalitions are driving carbon market coordination?
Three distinct coalitions have emerged to coordinate global carbon market policy. The Coalition to Grow Carbon Markets, led by the UK, Singapore, and Kenya, now includes 11 or 12 partner countries, while Switzerland leads a separate coalition focused on voluntary carbon market integrity, and Brazil—working with the EU, China, and Canada—coordinates the Open Coalition for Compliance Carbon Markets.
The political landscape for carbon markets has shifted dramatically toward formal international cooperation. Rather than isolated national programs, governments are now organizing through structured coalitions that serve specific policy objectives.
As Dirk Forrister explains in this episode, the Coalition to Grow Carbon Markets has expanded beyond its three founding members to encompass jurisdictions committed to strengthening carbon pricing infrastructure. This coalition serves as a political accelerator, building momentum for market-based climate policy adoption.
Three parallel frameworks with distinct mandates
Switzerland's coalition has taken on a more specialized role: building integrity standards for voluntary carbon markets rather than pursuing broad market expansion. This reflects recognition that voluntary carbon markets require distinct governance frameworks compared to compliance markets.
The Open Coalition for Compliance Carbon Markets, organized by Brazil with participation from the EU and China alongside Canada, serves a different function: harmonizing policies across mandatory emission trading systems. This coalition addresses the practical challenge of linking or coordinating between regional programs like the EU ETS, compliance markets in Canada, and emerging schemes in other jurisdictions.
These coalitions avoid the bureaucratic weight of creating new international institutions. Instead, they function as coordination hubs where participating countries can align policy design, establish common standards, and resolve conflicts before they become impediments to market function.
"We want serious targets that people will stick to that are embedded in law, that allow flexibilities so that we can really achieve the objectives of the Paris Agreement."
Dirk Forrister — President and CEO, International Emissions Trading Association (IETA). For 14 years, Forrister has led IETA's advocacy for carbon market provisions in major climate agreements, including the Paris Agreement. He has spearheaded research projects with Harvard and other institutions focused on carbon pricing architecture and market design, establishing himself as a leading voice in emissions trading policy at the international level.
The quote captures a key tension: carbon markets work only when governments commit to binding, enforceable targets that survive political transitions. Coalitions provide the peer pressure and technical support needed to embed these commitments in national law.
Each coalition reflects a different strategic need in the carbon market ecosystem. The growth coalition addresses political will and investment appetite; the voluntary market coalition addresses credibility and environmental integrity; and the compliance coalition addresses the technical harmonization required as regional programs inevitably interact. Together, they represent a shift from isolated national policy to a networked global approach—one where the episode also discusses ongoing tensions between supply and demand in Corsia, the international aviation offset scheme, revealing how coordination gaps still exist even within formal frameworks.
See also
What flexibility mechanisms does the Paris Agreement provide for countries to cooperate on carbon markets?
The Paris Agreement provides two main paths under Article 6: bilateral or plurilateral cooperation under Section 6.2, where countries are free to cooperate.
What is the current supply-demand imbalance in Corsia markets and how is it evolving?
When the year started, the Corsia market was roughly balanced with around 35 million tons of demand and approximately that much supply approved.
How are California and Quebec carbon markets working together, and does this model apply to other regions?
California and Quebec operate in tandem through the Western Climate Initiative framework, where states co-designed a program after borrowing the concept.