Single-year mitigation targets: Uncharted territory for emissions trading and unit transfers

Single-year mitigation targets: Uncharted territory for emissions trading and unit transfers

This working paper explores the question of target “time frame” and its implications for the generation and use of tradable emissions units. The paper argues that countries relying solely on single-year targets present greater uncertainty with regard to their emissions pathways, and raise concerns regarding both ambition and comparability with other targets. It concludes that the use of tradable units to meet a single-year target or the issuance of units in years prior to the single-target year could reduce the cumulative mitigation outcome compared with both single-year targets without using tradable units, and multi-year targets (with or without using units). Single-year targets may also limit the ability to use domestic carbon market instruments, such as emissions trading schemes.

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