New Markets Ahead?

Carbon Mechanisms Review 3-2013

November 2013 - In this issue of Carbon Mechanisms Review, we address the trend of emerging national and subnational emissions trading systems and present to you an analysis on the offsetting provisions of these. In our cover feature, we are examining the perspectives for New Market Mechanisms (NMM) and how developed and developing countries can jointly make use of this instrument. Finally we provide an overview of what is in store with regards to carbon markets in the coming climate talks in Warsaw.

Australia, California, China, Costa Rica, Kazakhstan, Québec, South Korea – the list of countries introducing or planning to install an emissions trading system is long. Recently, Mexico announced that it will be introducing a tax on fossil fuels. Emitting CO₂ is going to be levied with about 5$ per tonne; alternatively a corresponding amount of CERs stemming from CDM projects in Mexico can be surrendered. These examples show that Carbon Markets are alive – in fact, in the form of trading schemes, market mechanisms are actually experiencing a genuine boom.

For the NMM the CDM is going to play in important role in this game: as standard setter, as methodology provider, as „open source“ system. Greater standardisation is among the options that may enhance the CDM’s chances of acceptance in emerging emission trading systems. Therefore, our 'arguing the point' series features a debate on how to advance the current rules on CDM Standardised Baselines.

The oncoming climate talks at Warsaw are going to deal with fundamental issues regarding the flexible mechanisms – be it the review of the modalities and procedures of the CDM or decisions on the Framework for Various Approaches. Negotiators should therefore keep in mind that well-designed Carbon Markets are a vital element in the mix of instruments that can help achieving the ultimate goal of the Climate Convention.

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