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Designing the New Global Market Mechanism

Background and Objective

With the adoption of the Paris Agreement, the creation of a new, global climate change mitigation mechanism was agreed. Embedded in the Agreement's Article 6.4, the mechanism is designed to raise the ambition in terms of climate action and lead to an overall reduction in global emissions.

In implementing this and other requirements, a range of design-related issues need to be addressed. Wanting to support the Federal German Government and the Federal Environmental Agency (UBA) in addressing these issues during the UNFCCC negotiations, the UBA commissioned a research project headed by the Wuppertal Institute.
 

Implementation

Against the background of the ongoing negotiations on Article 6, key aspects of the mechanism under Article 6.4 have been examined in more detail. This mechanism is to succeed the CDM from 2021 onwards, but will include decisive improvements, especially with regard to reliable accounting of emission reductions and better integration into the national climate policy of the host country. The following questions were examined in specific discussion papers:

The discussion papers are aimed in particular at the international expert public and are intended to advance the discussion process on Article 6.4. They were mainly based on desk research. For the study on the role of the voluntary market, a number of market players were additionally interviewed.
 

Milestones and Outlook

The main research findings of the project were discussed with experts at a workshop on 30 October 2018. With this, the project results could be fed into the discussion and at the same time suggestions for their further elaboration could be taken up. Four discussion papers on key design issues of the Article 6.4 mechanism were published in June 2019. Two further discussion papers were published in the run-up to the Climate Change Conference 2019 in Madrid.

At the end of 2020, the activity has been concluded with a final report. The report summarises the results of the working papers and the workshop and relates them to the state of the climate negotiations after COP25 in Madrid.

Designing the New Global Market Mechanism

Role of BMU: Research funding

Lifecycle: 2017 - 2020

Implementation: Wuppertal Institute for Climate, Environment and Energy

Other Organisations Involved: INFRAS, Fraunhofer Institut für System- und Innovationsforschung ISI

Contact: Wolfgang Obergassel, wolfgang.obergassel@wupperinst.org

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