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Analysing the interactions between new market mechanisms and emissions trading schemes

Background and Objective

With Article 6 of the Paris Agreement, market mechanisms were made an integral component of the new climate regime. But it remains to be seen just how these mechanisms will be used, how they interact with one another and the extent to which they serve the vast number of nationally determined contributions (NDCs). Also, in recent years many and varied initiatives have been launched to promote emissions trading schemes and other carbon pricing instruments, and to support the UNFCCC negotiations by promoting further dialogue.

Given these diverse developments and the issues that remain unclear, the Federal Environmental Agency (UBA) commissioned a research project conducted by a consortium led by adelphi. 


Implementation

The project team analyzed the dynamic developments in the global carbon market, evaluated the results and provided input for use in fleshing out and refining the Federal German Government’s position in the UNFCCC negotiations and in the various carbon market initiatives.

As a first step, an in-depth analysis of the provisions on market mechanisms under Article 6 of the Paris Agreement was carried out and those problems were identified which should be taken into account when drafting the regulatory framework for the Paris Convention.

In a second step, the project shifted from a global discussion to a country-specific perspective in order to examine the extent to which different countries are willing to participate in the market mechanisms of the Paris Agreement. To investigate this, the focus was on three exemplary case studies from countries that have traditionally cooperated with Germany in the field of carbon markets - Ukraine, Vietnam and Ethiopia.


Results and Outlook

The project results underline the fact that the capacities of individual countries to use Article 6 vary greatly. It also became clear that many countries face particular challenges which can be divided into three different areas: a conducive environment, feasibility/implementability (especially with regard to technical MRV capacities and balancing) and compatibility with NDCs.

In the course of the project, the project partners organised five dialogue events to discuss interim results with experts and to incorporate their feedback into the research results. The final report of the research project available on the UBA website.

Analysing the interactions between new market mechanisms and emissions trading schemes

Role of BMU: Research funding

Implementation: adelphi

Life cycle: 2015 - 2017 (completed)

Further information: https://www.adelphi.de/en/project/analysing-interactions-between-new-market-mechanisms-and-emissions-trading-schemes

Contact: Dennis Tänzler, taenzler@adelphi.de

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