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Taking the Host Country Perspective

Aligning carbon market activities with climate finance and unilateral mitigation

The Paris Agreement requires all Parties to develop and communicate Nationally Determined Contributions (NDCs), confronting developing countries with a multiple challenge: Developing countries do not only have to decide which of their mitigation options they want to exploit but they must also determine whether to exploit this potential unilaterally or, as an alternative, use carbon markets or climate finance for implementing mitigation activities. 

This policy paper focuses on carbon crediting and climate finance as the two main external financing approaches. It discusses the main features of carbon crediting and climate finance, as well as their advantages and disadvantages from a host country perspective.

Date: June 2021

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