This article reviews on-going negotiations under the UNFCCC on the New Market Mechanism (NMM) and Framework for Various Approaches (FVA), which covers both market-based and non-market-based approaches. It argues that limited progress has been achieved in the past five years under the UNFCCC concerning the future international legal framework for carbon trading. A number of important design elements remain outstanding in the negotiations concerning the NMM and its modalities and procedures. The general objective and scope of the FVA also remain undefined. The article concludes that to successfully complete these negotiations, UNFCCC Parties must find convergence on principled questions concerning multilateralism and the future role of the UNFCCC in developing and overseeing market mechanisms.
This article reviews the on-going negotiations concerning the future of carbon trading under the United Nations Framework Convention on Climate Change (UNFCCC). It focuses on the New Market Mechanism (NMM) and the Framework for Various Approaches (FVA), which covers both market-based and non-market-based approaches under the UNFCCC. It argues that limited progress has been achieved at the international level in the past five years concerning carbon trading under the UNFCCC and its Kyoto Protocol beyond 2012. One of the reasons is that the future international mitigation regime remains relatively undefined and the level of ambition of developed countries’ mitigation pledges is low. It has been estimated that there will be a surplus of credits from the existing three flexibility mechanisms under the Kyoto Protocol that could satisfy demand for international credits through 2020, meaning that there is likely to be insufficient demand for credits from new market mechanisms. Some UNFCCC Parties fear that if operational, the NMM and the FVA would further reduce demand for credits from the existing Kyoto Mechanisms. Parties also hold divergent views on many key issues with respect to market-based approaches, including the detailed design of the NMM, and the role and functions of the FVA. Differences over top-down and bottom-up approaches that have slowed down negotiations on the legal design of the international mitigation regime since preparations for the 2009 UN Climate Change Conference in Copenhagen are increasingly apparent in the negotiations on market mechanisms. While a number of Parties would prefer the UNFCCC to play a central role in regulating such market mechanisms that are used for compliance under the UNFCCC, some Parties advocate a bottom-up approach, calling for regulatory diversity that builds on mechanisms developed outside the UNFCCC regime. As widely expected, the recent 2012 UN Climate Change Conference in Doha brought no conclusive answers on the many principled differences concerning market approaches. It merely conferred to the Subsidiary Body for Scientific and Technological Advice (SBSTA) the mandate to elaborate the modalities and procedures of the NNM as well as central elements of the FVA by the 2013 UN Climate Change Conference in Warsaw.
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|Quelle:||Issue 4/2012 (Dezember 2012)|
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|Autor:||Dr. Kati Kulovesi |
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Between Twilight and Renaissance: Changing Prospects for the Carbon Market
© Lexxion Verlagsgesellschaft mbH (12/2012)
While several established carbon markets are experiencing a crisis of confidence, a remarkable transition towards carbon trading is currently underway in the developing world. Given the multiple benefits ascribed to market-based instruments for greenhouse gas abatement, the rise of carbon markets in important emerging economies should come as no surprise: no other policy option promises certainty of environmental outcome while lowering the cost of its achievement, and developing countries with rapidly growing economies are no less sensitive to the impacts of carbon constraints than their developed counterparts. But it would be premature to assume a carbon market renaissance: as the experience in industrialized countries has shown, quantity rationing with tradable emission units places considerable demands on the implementing jurisdiction, requiring technical capacity and political will in order to succeed. Although the rise of carbon trading in developing countries affirms the continued relevance of this policy instrument, it also highlights the importance of policy learning and clarity about objectives if earlier missteps are to be avoided. Providing the introductory background for a special issue of the Carbon & Climate Law Review (CCLR) on carbon markets in the developing world, this article canvasses recent developments and central trends in carbon trading, suggesting tentative priorities for developing countries engaged in the pursuit of domestic markets.
Market-based Instruments for Greenhouse Gas Mitigation in Brazil: Experiences and Prospects
© Lexxion Verlagsgesellschaft mbH (12/2012)
Brazil has become an increasingly important participant in the discussion about climate change, combining an active role in climate diplomacy with credible domestic policy efforts. Market-based instruments have featured prominently in its domestic policy landscape, with carbon markets envisioned both at the federal and regional level. Aside from successful participation in the Clean Development Mechanism (CDM) and some progress in the creation of voluntary offset markets, however, the pathway towards a domestic carbon market has so far been fraught by delays and ongoing uncertainty. Still, Brazil can build on proven institutional structures, quantified emissions limitation targets, and new rules on the collection of emissions data and sectoral mitigation plans to establish robust market-based instruments. A carbon market can help leverage its vast mitigation potential to abate greenhouse gas emissions at sufficient scale while limiting the cost of compliance for domestic entities. Given its unique emissions profile, however, Brazil should not focus on becoming a net seller of carbon credits or allowances to foreign entities, but should instead harness the opportunity to create an ambitious, welldesigned market and thereby become a leader on climate change mitigation in Latin America.
Emissions Trading around the World: Dynamic Progress in Developed and
© Lexxion Verlagsgesellschaft mbH (12/2012)
Drawing on a series of forthcoming case studies developed under a joint project of the Environmental Defense Fund (EDF) and the International Emissions Trading Association (IETA), this article conveys the dynamic bottom-up progress on emissions trading systems (ETS) around the world. The case studies will provide an easily accessible tool that facilitates the analysis of ETS based on examples from existing and developing policies. Each of the 18 case studies provides an overview of the history on climate action within the specified jurisdiction, highlights ongoing challenges and unique features, and describes key ETS elements. The jurisdictions of focus lie within both developed and developing parts of the world, and the set of case studies encompasses multinational-, national-, regional-, state/provincial-, and city-scale jurisdictions. This article summarizes the key design features and differentiating aspects of ETS development in each jurisdiction. While designs vary, each ETS described ultimately belongs to the same category of quantity-based market mechanism.
The Carbon-Added Tax: An Idea Whose Time Should Never Come
© Lexxion Verlagsgesellschaft mbH (10/2010)
A “carbon-added tax” (CAT) patterned after the credit-method value- added tax is inadvisable. CAT would be calculated by subtracting (allowing credit for) tax on the carbon content on imports, shown on invoices, from the carbon content of sales.
Improving the Clean Development Mechanism Post-2012: A Developing Country Perspective
© Lexxion Verlagsgesellschaft mbH (4/2010)
In this article, we assess the future prospects of the Clean Development Mechanism (CDM) from the perspective of a developing country, drawing on Vietnam as a case study. First, we review the performance of the CDM and describe the evolution of carbon markets on the path towards a post-2012 climate regime. Next, we place Vietnam in a post-2012 context, and assess potential project resources, challenges, and opportunities that could arise for the country from a future climate policy framework. Our analysis suggests that the CDM should remain in place and be improved to facilitate more meaningful participation by developing countries in climate mitigation efforts beyond 2012. Finally, the article sets out eight proposals that could help improve the CDM as the world progresses towards a new international climate policy framework.