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Market mechanisms in the new climate agreement (updated)

New paper surveys role of market mechanisms in INDCs

(Photo: tpsdave/

November 2015 - Market mechanisms – the Clean Development Mechanism (CDM), Joint Implementation (JI) and Art. 17 emission trading – have been a central feature of the Kyoto Protocol. The Parties to the United Nations Framework Convention on Climate Change (UNFCCC) intend to adopt a new comprehensive climate agreement at this year’s Conference of the Parties (COP) in Paris. The shape of the new agreement is emerging only slowly, including the role market mechanisms will play.

To gauge the potential scope of market mechanisms in the forthcoming Paris agreement, this paper surveys the submitted INDCs on the question to what extent they envisage the use of market mechanisms. In detail, the paper looks at five questions for each INDC:

  • Does the INDC make any mention of market mechanisms?
  • Does the Party plan to use market mechanisms to achieve its contribution to the Paris agreement?
  • If a Party intends to use market mechanisms, does the INDC specify which mechanisms or types of units the country intends to use?
  • Does the Party quantify the extent to which it intends to use market mechanisms? Under the Kyoto Protocol, use of mechanisms has been supposed to be supplemental to domestic action, though this principle has never been quantified.
  • Does the Party specify how the use of mechanisms will ensure environmental integrity and avoid double counting?