The Paris Agreement provides for a new generation of market-based approaches to international cooperation on climate change mitigation. While there is not yet a name for the mechanism(s) referred to in Article 6 of the Paris Agreement, the provisions hold significant potential for on the ground market-based climate action as well as for raising ambitions. At the same time, future climate talks will have to make significant contributions to the eventual design of a post-Kyoto carbon market and its mechanisms. These are the main findings of the 16th edition of the CTI Workshop, hosted by the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) on 23-24 June 2016 in Berlin, Germany.
Provisions of Article 6 can be used as tools for raising ambitions
Under the title of “Modes of Cooperation after Paris – Market-based Approaches and Raising Ambition”, policy experts, decision-makers, scientists and representatives of financial institutions met to discuss the potential of market-based approaches to climate change mitigation in light of the Paris Agreement. In addition to a conceptual approach to new provisions for market-based climate action via Article 6 of the Paris Agreement, the workshop also took into account practical issues, such as the role of market mechanisms in Nationally Determined Contributions (NDCs) and in climate action at subnational levels. Taking a technical perspective, the workshop further dealt with recent challenges in accounting, monitoring, reporting and verification (MRV) as well as financing of climate action after Paris. Participants also took the opportunity to exchange experiences and to network.
The two-day workshop opened with presentations and panel discussions on the future of market-based approaches following the Paris Agreement. The panels came to the conclusion that Article 6 of last year’s international climate agreement holds significant potential for market-based international cooperation and that its provisions can be used as tools for raising ambitions. The panelists agreed that in order to tap the agreement’s potential for market-based climate action, substantial work on both the design of a new mechanism and on long-term confidence and trust building in these new approaches is necessary.
Avoiding production of “hot air” by taking MRV challenges seriously
In subsequent presentations and discussions, two further aspects were highlighted: firstly, participants warned that the momentum of the bottom-up approach through Parties’ submission of NDCs must not be slowed by lengthy negotiation processes. Secondly, however, it became clear that challenges in accounting and MRV, for instance, should be taken seriously in order to avoid double counting and the production of “hot air”. Participants urged that lessons must be learnt from experiences with the Kyoto mechanisms (CDM, JI, emissions trading).
The second day of the workshop focused on the role of cities in the Paris Agreement and on financing approaches. Representatives of city networks and subnational governments affirmed that cities and regions are “ready to roll” and prepared to serve as laboratories for market-based approaches. Their limited financial capacity, however, remains the main barrier for most cities and regions. A potential remedy may, for example, be results-based financing; this and other options were discussed by representatives of public and private financial institutions.
As in previous years, adelphi took on the development of the workshop’s conceptual design, its conference management, the selection of participants and speakers, and conducting the 2016 CTI Workshop on behalf of BMUB.