Perspectives your partner for pioneering new market based instruments
The evolution of new market mechanisms under the UNFCCC
The Clean Development Mechanism (CDM) as the first market based instrument under the UNFCCC was and continues to be a tremendous success for the identification and financing of cost-effective GHG emission reduction activities in developing countries. Building on this achievement, the international community as per intends to establish new market based instruments within the international climate policy framework that would generate carbon credits that can be used to meet part of developed countries targets (current or potential future ones) under the UNFCCC.
Possible design options for new market mechanisms
New market mechanisms are generally thought to cover a whole (sub-) sector in a developing country (rather than individual projects such as the CDM does). The most prominent theoretical concepts for their design are “Sectoral Trading” (e.g. a cap-and-trade scheme) and “Sectoral Crediting” (e.g. based on a baseline-and-credit approach). Any kind of such mechanism would need to be governed by the UNFCCC (e.g. at least as a rulemaking body and a registry for the credits).
Perspectives support for new market mechanisms
Perspectives has been involved in advisory work on the German Emission Trading Scheme from day one and has since 2008 continuously provided analysis to Governments on possible design options for new market mechanisms. Our experienced team can support you in the following areas:
- Conceptualization of New Market Mechanisms
- Analysis of relevance of New Market Mechanisms over time, including estimation of lead times and credit supply forecasts
- Development of robust MRV frameworks for New Market Mechanisms