This weekend, COP 21’s Paris Agreement included two key elements important for the development of an international carbon market including: 1) Use of internationally transferred mitigation outcomes by parties and 2) Establishment of a mechanism for mitigation and sustainable development.
According to Yann Andreassen, Senior Analyst EU carbon markets at ICIS Tschach Solutions, “these two elements enable the Paris Agreement to create a framework for international carbon trading under the UNFCCC umbrella. This will allow parties to use international market mechanisms in order to fulfil their NDCs (Nationally Determined Contributions)”.
Linking carbon markets
To an extent, the Paris agreement could also play a facilitative role in linking emissions trading systems around the world. Andreassen states that “linking carbon markets doesn’t require an international agreement like Paris to materialise”.
“However, the potential convergence of accounting practices to emerge from the agreement could be an important step forward, as environmental integrity is a critical element for linking carbon markets. Furthermore, the use of internationally transferred mitigation outcomes will help integrate mitigation actions, like an emissions trading system, under the international framework”.
A successor to Kyoto’s flexible mechanisms
The new mitigation crediting mechanism can be seen as a successor of both the Clean Development Mechanism (CDM) and Joint Implementation (JI) – the two flexible mechanisms implemented under the Kyoto Protocol. On the succession, Andreassen comments that “the new crediting mechanism will reflect an evolution from Kyoto flexible mechanisms. Under the Paris Agreement, all parties – both developed and developing countries – are able to host the crediting mechanism and use credits generated towards their NDCs”.
At this point it is unclear what the new crediting mechanism will look like but, Andreassen states that, “in contrast with the CDM, they will not start from scratch for the development of this mechanism. It will take some time to hammer out the rules but there are a lot of methodologies and processes from the Kyoto flexible mechanisms to build upon”.
Another uncertainty at this point is demand according to Andreassen “with EU ETS international offset demand gone after 2020, and only a few countries having confirmed the use of international market mechanisms in reaching their NDCs, which parties will buy those new credits remains an open question.”
No solace in Paris for the CDM
With a new crediting mechanism emerging, the CDM era will come to an end in 2020. According to Judith Schröter, Lead Analyst US Carbon & Offset Markets at ICIS Tschach Solutions, “between now and 2020, we could see some degree of movement in terms of CDM activities, with the provision for the voluntary cancellation of CERs found in the Paris Agreement. However I would not hold my breath waiting for the resurgence of the CDM, such voluntary provision will only have a marginal impact at best”.
Like our Facebook Page
4 Tips For Choosing An Eco-Friendly Home Backup Power Source
10 Things To Consider When Choosing A Home Solar Company
5 Sustainable Ways Of Disposing Building And Demolition Waste
Why 2022 Is Your Last Chance to Get a 26% Return on Your Solar Kit
Why ESG Initiatives Are Vital in Tapping Young Investors
Is It Possible to Work in Tech Without Harming the Planet?
Zero Waste Living and Its Importance
Investing in a Sustainable Environmental Future for Northern Virginia
Prominent Trends in Seafood Sustainability in 2022
Sustainable Landscaping Tips for Your Property
Low Emission and Clean Air Zones: What You Need To Know
A Guide to Eco-Friendly Landscaping
Is the Hyundai i30 A Valuable Investment?
Is Couchsurfing a Good Option for Eco-Friendly Traveling?
Harnessing Sustainability with User-Centric Technology Innovation
12 Essential Things for Buying Your First Home
Tips for Optimal Waste Management in Your Home
5 Kitchen Design Trends Sustainable Homeowners Should Follow
Epic Reasons Eco-Friendly Tourists Should Visit Frankfurt
Hypermiling: The 3 Ways To Drive Your Car For Maximum Fuel Efficiency
Features11 months ago
Seven Health and Safety Tips for Eco-Friendly Products in a Green Home
Energy12 months ago
Eco-Friendly Homeowners Lower Carbon Footprints through Greater Air Conditioner Efficiency
Features11 months ago
Essential Guidelines for Eco-friendly Moving into new Home
Features10 months ago
5 Compelling Reasons to Hire an Eco-Friendly Contractor