Below are the abstracts and links to two new publications by me on new market mechanisms (NMMs) under the UNFCCC that got published recently. In a nutshell, there is quite a long way to go.
In addition, I attended a workshop on NMMs last week where somebody asked the impertinent question what exactly we need NMMs for. Two answers were given by the other participants: increasing the supply of offsets and moving developing countries towards common emissions accounting.
Then another impertinent person asked whether we really need NMMs for achieving these objectives. As for increasing supply – besides the obvious problem that the market is already oversupplied -, PoAs and standardised baselines (SBL) under the CDM may be a much easier way forward. In addition, it may be hoped that SBL could minimise some of the CDM’s non-additionality problems. The impertinent person therefore suggested that the EU, being by far the largest buyer, should move the CDM into SBL by tying acceptance of CERs to the use of SBL. As of next year, CERs from new projects will only be accepted in the EU ETS if the projects take place in Least Developed Countries. So the EU could open a new window for projects in non-LDC countries that use SBL. Preferably in the context of increasing its target to 30%. Interesting thought.
As for moving towards common accounting, here as well there may be a much for straightforward road ahead: NAMAs. As NAMAs are supposed to be measurable, reportable and verifiable, they are an obvious way forward to strengthening emissions accounting in developing countries.
And here’s the two new papers.
The Durban conference decided to establish a new market-based mechanism that is to cover a broad segment of a country’s economy. The implementation details are to be agreed at this year’s conference in Qatar. The question is, however, which developing countries would actually be able to implement such a new mechanism. The introduction of the EU emission trading system highlighted the many challenges that even advanced developed countries face when establishing a carbon market. This paper therefore aims to explore the essential prerequisites for the implementation of new market mechanisms (NMM). In addition to a theoretical discussion it considers the cases of China and Mexico.
Countries have been discussing “various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions” in the Ad-hoc Working Group on Long-Term Cooperative Action (AWG-LCA) for several years. In Durban, Parties decided both the establishment of a new top-down mechanism as well as to consider establishing of a framework for bottom-up initiatives. Parties and accredited observer organisations were invited to submit their view on both issues and the AWG-LCA held workshops on these issues on 19 May 2012. This paper provides an overview of the positions and proposals as contained in the submissions and expressed at the workshops.