Catherine Wolfram, a professor of applied economics at the Massachusetts Institute of Technology (MIT) in the US, says having groups of countries discuss carbon pricing is a \u201chuge step\u201d. Wolfram has conducted research into these ideas as part of the Harvard-MIT Global Climate Policy Project, modelling what could happen if 21 countries and the European Union coordinate carbon prices. Published<\/a> last year, its findings included a sevenfold increase in emissions cuts and an additional USD 185 billion in annual revenue.<\/p>\n\n\n\n However, previous attempts to establish such \u201cclimate clubs\u201d have floundered. Global South countries fear the mechanism would be used as a ratchet by rich countries to introduce a flat global carbon price, which would be punitive for industry in the developing world. The lack of trusted cross-border emissions accounting is another obstacle.<\/p>\n\n\n\n Plans for the OCCCM were first announced<\/a> last year in Brazil at COP30, the UN Framework Convention on Climate Change\u2019s flagship annual summit. This week, a group of nations including Brazil and China agreed to accelerate<\/a> the OCCCM\u2019s development during the China Carbon Market Conference, which is taking place in the eastern city of Wuhan. Brazil also hopes to explore whether China could become<\/a> a buyer of its carbon credits at the conference, with the goal of announcing a bilateral carbon market accord in time for COP31 this November.<\/p>\n\n\n\n The OCCCM\u2019s ultimate success will depend on how well Brazilian diplomats can navigate the interests of a disparate group of members and some fiendishly difficult technical challenges.<\/p>\n\n\n\n As of April this year, 87<\/a> carbon pricing policies were being implemented by governments worldwide, according to an annual review by the World Bank. These policies are split between carbon taxes levied on emitting companies, and cap-and-trade systems. The latter allows companies to trade so-called carbon credits with each other to offset emissions. Together, they currently cover nearly 30% of global emissions, and raised USD 107 billion in 2025.<\/p>\n\n\n\n Yet the differing priorities of developed and developing countries means these markets remain strikingly unequal<\/a>: carbon costs about USD 68 per tonne in Europe and Central Asia but USD 4 in Latin America. The disparity risks companies simply offshoring their emissions to somewhere cheaper. It also prompted the European Union to introduce its Carbon Border Adjustment Mechanism (CBAM<\/a>), which charges importers a levy equivalent to that paid by those within the EU Emissions Trading System.<\/p>\n\n\n\n With the OCCCM, Brazil is ultimately aiming to align how emissions are measured across different energy systems and economies. In Wuhan, Brazil will argue that once markets recognise each other\u2019s rules, border adjustment mechanisms like the CBAM will become unnecessary.<\/p>\n\n\n\n The coalition\u2019s terms of reference<\/a> commit members to strengthen monitoring, reporting and verification, improve carbon accounting and explore high-integrity credits. They also stipulate the exploration of \u201coptions to promote long-term interoperability of regulated carbon markets\u201d. In practice, that means integrating dozens of national systems: some that cap emissions; some that tax them; and some, like India\u2019s new scheme<\/a>, based on baselines and carbon credits.<\/p>\n\n\n\n The design of the OCCCM is pointedly not punitive. Unlike the EU\u2019s CBAM, which the G77 bloc and China fear will stunt their industries, the OCCCM is not aiming for tariffs. Instead, it will focus on how emissions are measured, verified and accepted across borders.<\/p>\n\n\n\n Brazil\u2019s leadership here can be seen as a continuation of its COP presidency, and an ambition to be a global leader on climate action. But its own carbon market, the Brazilian Emissions Trading System (SBCE), is still being designed. Trading is not expected until 2030. Critics say this is undermining Brazil\u2019s aim to lead a carbon markets revolution.<\/p>\n\n\n\n Wolfram says Brazil\u2019s credibility ultimately rests on delivery at home: \u201cI think it needs a functioning market.\u201d She points to October\u2019s presidential election: if the incumbent president, Luiz In\u00e1cio Lula da Silva, does not win, the SBCE could be suspended or dismantled. <\/p>\n\n\n\n \u201cBrazil has always been a great player in climate negotiations,\u201d says J\u00falia Cruz, Brazil\u2019s national secretary for the green economy, decarbonisation and bioindustry. \u201cWe want to ensure we continue to contribute to the climate debate with a vision of economic development and \u2013 especially in the case of the [OCCCM] \u2013 as a formulator of technical standards.\u201d<\/p>\n\n\n\n Last year\u2019s Harvard-MIT report proposed minimum carbon prices that would be graduated by a country\u2019s income, with support for poorer nations and, eventually, joint border measures. But it remains unclear whether it will be possible to gather consensus around such ambitious measures.<\/p>\n\n\n\n The declaration adopted at COP30 does not contain any numbers<\/a> at all. According to Florentine Koppenborg, an environmental and climate policy academic at Germany\u2019s Technical University of Munich, this indicates \u201cBrazil did not have the power to get all the countries on board with this idea initially.\u201d<\/p>\n\n\n\n Cruz opts to describe a broader perspective: \u201cHarmonising \u2013 or eventually revising or abandoning \u2013 border adjustment mechanisms is a long-term endeavour, but one of fundamental importance for our exports.\u201d<\/p>\n\n\n\n While China and the European Commission will serve as OCCCM co-chairs underneath Brazil, these formal roles may underplay their ultimate influence. \u201cThe EU is one of the most advanced policymakers in this area,\u201d notes Milan Elkerbout, director of the International Climate Policy Initiative in Washington DC. \u201cIts experience makes it very well placed to lead on this topic.\u201d<\/p>\n\n\n\n Some experts fear this outsized influence could lead to the European Union trying to dictate proceedings. \u201cI really hope that the EU is not trying to export their own rules,\u201d says Koppenborg. \u201cStrategically, it would be very unwise if the European Union tried to export their own system using a Global South label.\u201d<\/p>\n\n\n\n Its influence, however, stops short of control. The coalition\u2019s agreements are \u201cnot a body of international law\u201d, says Elkerbout; the EU \u201cwill really try to influence what the open coalition says about anything [regarding] monitoring, reporting and verification, and interoperability, but it\u2019s not like it can impose it\u201d.<\/p>\n\n\n\n Brazil, meanwhile, aims to shape \u201cthe international technical standards for measuring and controlling emissions, so that the comparative advantages of our industry … are recognised internationally,\u201d Cruz says.<\/p>\n\n\n\n The EUR 500 million pledged<\/a> by the EU under its trade deal with India to help decarbonise steel and aluminium \u2013 two target sectors of the CBAM \u2013 is \u201cexactly the kind of north-to-south climate finance in support of industrial decarbonisation that we think something like the coalition could systematise,\u201d says Wolfram.<\/p>\n\n\n\n The most conspicuous absence is the United States, which has endorsed neither the declaration nor the coalition. This is even though seven of the countries that signed the declaration account for more than two-thirds of US goods exports, according to an analysis<\/a> by the US policy think-tank the Niskanen Center, published in December. It means the US could end up being heavily penalised for not participating.<\/p>\n\n\n\n Wolfram calls this absence clarifying: it proves the need for \u201cprocesses in addition to the COP and the UN Framework Convention on Climate Change … a group of like-minded countries and not all 190-plus signatories\u201d. That said, if the US came back, she adds, it would be \u201ctransformative to the momentum of the coalition\u201d.<\/p>\n\n\n\nCarbon market challenges<\/h2>\n\n\n\n
Brazil\u2019s two-year test<\/h2>\n\n\n\n
![\"President](\"https:\/\/dialogue.earth\/content\/uploads\/2026\/09\/Belem-Climate-Summit-Lula_Kiara-Worth_UN-Climate-Change_Flickr_54906186176-scaled.jpg\")
<\/div>A fix for fragmented markets<\/h2>\n\n\n\n
Who really calls the shots?<\/h2>\n\n\n\n
![\"smoke](\"https:\/\/dialogue.earth\/content\/uploads\/2026\/09\/Para-Brazil-Marizilda-Cruppe_Flickr_50446142637.jpg\")
<\/div>The empty chair in Washington<\/h2>\n\n\n\n