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Linking Carbon Markets through the CDM and Other Offsetting Mechanisms

Background and Objective

The global carbon market has become more and more fragmented in the course of recent years, the reason being that a number of national schemes and carbon pricing systems have opted to away from the existing standard applied under the Clean Development Mechanism (CDM). Among the known examples of this new approach are the Australian Carbon Farming Initiative, Japan’s Joint Crediting Mechanism, and the Chinese Certified Emissions Reductions scheme. Against this background, the Federal Environment Agency (UBA) commissioned a research and dialogue project which was to explore why the established CDM framework was not used in some regions and how barriers towards a harmonized global carbon market could be avoided in the future.
 

Implementation

The research project analyzed the climate policy framework in Australia, Japan, California and South Korea. The analysis focused on the question why new decentralized offset systems emerged. The following questions were investigated: To what extent do they differ from the CDM? And what are the prospects of reforming the CDM to create a global mechanism that links the worldwide efforts to reduce emissions? The analysis was largely based on the views of national experts. The results of the research project were discussed during the 7th CDM Roundtable in April 2013, a workshop of the Federal Environment Agency in June 2013 and a side event during the SBSTA Meeting 38 in Bonn in the same month.
 

Results and Outlook 

The findings of the report prepared by the project team showed that there are a number of reasons for the ongoing and accelerated fragmentation of the carbon market. On the one hand, the CDM's project-based approach was criticized with regard to additionality, but on the other hand it could be observed that each jurisdiction had its own reasons for wanting to deviate from the CDM and they were undoubtedly influenced both by local conditions and political considerations. 

Looking at the various schemes in more detail, it became clear that none of the policies was developed in isolation and that their approaches and methodologies largely borrowed from the CDM. The CDM served as a kind of open-source resource that had been altered to meet the needs of the jurisdiction involved. The final report of the project is available here.

Linking Carbon Markets through the CDM and Other Offsetting Mechanisms

Countries: Australia, USA, Japan, South Korea

Role of BMU: Research funding

Lifecycle: 2011 - 2013 (completed)

Implementation: adelphi

Other Organisations Involved: Wuppertal Institute for Climate, Environment and Energy

Further Information: https://www.adelphi.de/en/publication/clean-development-mechanism-and-emerging-offset-schemes-options-reconciliation

Contact: Dennis Tänzler, taenzler@adelphi.de

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