China profiles itself as a country with an ambitious climate and environmental policy. In 2020, President Xi Jinping announced his intention to make China a carbon-neutral country by 2060, while adding that China’s total emissions should reach an absolute peak before 2030. To honor these commitments, China needs to step up ambitions on its emission trading system to contribute to global decarbonization efforts. China launched its national carbon market in 2021, and it immediately became the world’s largest in terms of covered emissions.

At a time when few would contest that climate change presents the great existential challenge of our era, it is remarkable that globally, carbon pricing remains marginal. Carbon taxes and carbon markets (or emissions trading schemes), of different sorts cover less than a fifth of global carbon emissions as of 2022. Nevertheless, the number has been on the rise and it is no stretch to claim that the European Union with its ETS launched in 2005 has played a pivotal role in the proliferation of carbon pricing. Now, the introduction of CBAM should serve as a reminder that the Union is serious about the need for global climate action.

Climate dividend is a redistributive tool through which people can be compensated for the increased costs of carbon taxation in the form of a blanket payment. How could the tool work in the environment of emissions trading in Czechia? Could the EU ETS, the EU's carbon market work for the benefit of Czech citizens?

Evidence of the Covid-19 pandemic is to be found reflected in figures recording the total amount of carbon dioxide emissions, but the “positive” impact has been short-lived. Even by December 2020 emissions associated with energy use were 2% higher than in December 2019. The year 2020 was also one of the three hottest years since measurements began, whilst at the same time rounding off the hottest ever decade. Measured concentrations of emissions indicate that the world is on track to warm by more than 3°C by the end of the century, far exceeding the safe temperature target set in the Paris Agreement (PA). Clearly, it is not desirable to wait for disasters or crises to prompt concerted action on climate change mitigation, but rather to employ well-thought-out decarbonization strategies sooner rather than later. The purpose of this publication is to provide an expert assessment of the Czechia's foreign policy and to make recommendations to its relevant actors for the future.