Climate Policy Advise
Post 2012: Sectoral approaches and future of the CDM
The post-2012 carbon market is likely to be different in scope and nature from what exists today.
Sectoral approaches - be it as sectoral crediting or sectoral trading - have become serious policy options on the agenda of the post-2012 negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). These instruments allow addressing emission reduction potentials in certain countries and sectors, in particular those that are currently not subject to advanced climate policy regimes (e.g. no emission quantitative reduction targets). Thus, sectoral approaches play an important role for the inclusion of Non-Annex-I countries in a post-2012 regime.
Furthermore, sectoral approaches provide an option to minimize the risk of carbon leakage, an issue that is currently being discussed in Europe with regard to the compliance burden for companies covered by the European Emissions Trading Scheme (EU ETS). For more background information on sectoral approaches click here.
At the same time, it is very likely that the currently known Clean Development Mechanism (CDM) will undergo significant changes. CDM market players that anticipate such changes in early stages will be in the best position to react quickly to minimize risks and maximise chances for their CDM-projects and -portfolios.
In order to help our clients to prepare best for the upcoming changes, Perspectives offers its expertise for analysing the most likely policy scenarios for the post 2012 carbon market. Our scope of services includes inter alia:
- Post 2012 procurement strategies for CER-buyers and funds
- What is the exposure a buyer / carbon fund would take, and what is the payoff?
- What is an appropriate diversification?
- Identification of sectors/countries that are most likely to face sectoral approaches in the post 2012 climate policy regime that effect current CDM projects
- Identification and analysis of the most likely rules for existing CDM projects
- Will they continue to generate CERs Post-2012/during their registered crediting period/after the end of their current crediting period?
- What will happen to the projects after a sectoral crediting mechanism has been applied – will they continue to generate carbon credits?
- Analysis of the implications for the carbon market
- Analysis of the implications for global GHG emissions
- What do host countries need to consider for becoming an attractive county for post 2012 carbon investment?
Perspectives’ close co-operation with its mother company Point Carbon AS allows merging extensive climate policy expertise with outstanding quantitative modelling skills. With support of Point Carbon’s "Global Carbon Model", we can offer quantitative studies, such as projections of the effects of introducing a climate policy on the global carbon market and its prices.