COP22 in Marrakesh: new discussion paper on market mechanisms released

While countries started negotiations on the design of two market mechanisms anchored in the Paris Agreement during the COP22, Oeko-Institut together with NewClimate Institute and adelphi has analysed relevant provisions and context for carbon markets in a recently published discussion paper.

A year ago, only few would have predicted a strong basis for market mechanisms in the new climate regime. With the Paris Agreement it has become clear: carbon markets provisions contained in Article 6 of the Paris Agreement provide a solid anchor for such mechanisms. Article 6 provides two of such market-based approaches: (1) Cooperative Approaches (CA) and (2) Mitigation and Sustainable Development Mechanism (MSDM) - to be applied by the United Nations Framework Convention on Climate Change (UNFCCC) Parties. The particular design elements of the new mechanisms still need to be negotiated.

"International Market Mechanisms after Paris" to facilitate discussions among states

On behalf of the German Emissions Trading Authority (DEHSt) at the German Federal Environment Agency (UBA), adelphi together with Oeko-Institut and NewClimate Institute analyses and interprets the dynamic developments in the field of global carbon markets. A new discussion paper "International Market Mechanisms after Paris" released for the COP22 in Marrakesh analyses Article 6 in the Paris Agreement and the provided market mechanisms CA and MSDM. The authors identify the main goals and aims of the international carbon market and examine closely issues of interaction and relation of the provisions including synergies and conflicts.

The purpose is to facilitate the discussion among UNFCCC Parties, given the dynamic nature of the topic. The analysis suggests that the purpose of international carbon markets has changed. While increasing economic efficiency was more prominent during the first development phase, raising mitigation ambition may become more important in the phase to come.

Further research on countries' cooperation needed

"International Market Mechanisms after Paris" is part of the overarching project to analyse the interactions between new market mechanisms and emissions trading schemes. Publications released as a part of this project provide the basis for regularly organised expert workshops on the consequences of Article 6 of the Paris Agreement, which in turn inform policy-makers and experts. In a next step, adelphi and the consortium will conduct further research on the cooperation between countries through specific country case studies.

To reflect on the results of the project and further developments like the results of ongoing climate negotiations, another series of expert workshops will be carried out next year. A final report, which will evaluate and summarise the results of the two years research, will finalise the project in the end of 2017.