Climate change mitigation
International carbon market mechanisms in a post-2012 climate change agreement
Will international carbon markets be sustainable in a post-2012 agreement?
Authors:
D. Murphy (ed); J. Drexhage (ed); P. Wooders (ed)
Publisher:
International Institute for Sustainable Development, 2009
Market-based mechanisms have the potential to play a large role in the global effort to address climate change under the United Nations Framework Convention on Climate Change (UNFCCC). This paper provides an overview of the role and profile of international carbon market mechanisms in a new international post-2012 climate change agreement. The paper first reviews the three market-based instruments under the Kyoto Protocol namely: International Emissions Trading (IET), Joint Implementation (JI) and the Clean Development Mechanism (CDM).
The three instruments were introduced in the Kyoto Protocol to help countries meet their targets and effectively create the carbon market. The paper examines a range of other possible market mechanisms under consideration in the international climate change negotiations: to help countries meet their targets in a cost-effective manner; encourage the private sector to contribute to Greenhouse Gas (GHG) emission reduction efforts; and encourage the participation of developing countries as well as stimulate sustainable development, technology transfer and investment in these countries.
The authors conclude that effective international market mechanisms are needed to help countries meet their targets in a cost-effective manner and to encourage the participation of developing countries in meeting the goal of the UNFCCC.
Recommendations given for the different mechanisms are noted below.
Clean Development Mechanism (CDM):
- introduce sectoral crediting of GHG emission reductions below a previously established target
- introduce crediting on the basis of nationally appropriate mitigation actions (NAMAs)
- ensure environmental integrity and assess additionality through the development of positive or negative lists of project activity types
- improve access to CDM project activities and promote co-benefits for CDM projects by facilitative means
- include nuclear activities and promote co-benefits for JI projects.
- introduce GHG emissions trading based on sectoral targets and NAMAs
- introduce modalities and procedures for the recognition of units from voluntary GHG emissions trading systems.
