Germany’s international cooperation on carbon markets: Status and prospects in select partner countries

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Case studies
Ethiopia, Vietnam, Ukraine

Quick facts

This suite of four publications try to unpack the black box of where countries stand on their readiness to engage in Article 6 of the Paris Agreement. Article 6 lays down the vision for carbon markets under the Paris Agreement. The three standalone case studies on Ethiopia, Vietnam and Ukraine discuss country-contexts on Article 6 readiness in an objective manner, looking at the enabling conditions in these countries, the feasibility to maintain robust accounting and MRV, and compatibility of their NDCs. Potential entry-points for international support to facilitate readiness are also discussed. NewClimate institute conducted this work along with partners Oeko Institute and adelphi through the generous support of the German Environment Agency (UBA).



About the case studies

Do Parties have sufficient capacities to fulfill the requirements to be agreed and use Article 6, and if not, can their capacities be strengthened through international cooperation? These questions form the core of the publications produced under this multi-year research project.  The outputs include:

An overview paper which outlines a detailed inventory of Germany’s current carbon market cooperation and our selection approach of the case countries.

Three standalone case studies on Germany’s carbon market cooperation and prospects for engaging with Article 6 of the Paris Agreement. The three case countries – Ethiopia, Vietnam and Ukraine – represent a spectrum of different levels of carbon market development (from early to advanced). In the absence of concrete rules for Article 6 yet, the assessment provides a first order estimate of the readiness of countries to engage in Article 6, and identifies pathways for Germany’s cooperation to continue supporting its partner countries in developing/participating in rule-based and well-functioning market instruments. Recommendations are provided for ongoing negotiations and entry points for international support.

While each case study presents the unique circumstances of different countries, the key take-ways distilled from the three together are as follows:

  1. Countries will have different entry points for Article 6, based on their readiness
  2. Readiness for markets is inherently linked to readiness for NDC implementation in countries
  3. Countries interested in Article 6 need to deliberate on its role in their NDC achievement.
  4. Unpacking high-level targets will be key to facilitate environmental integrity objectives of Article 6
  5. To this effect, operationalising Article 6’s environmental integrity principles would benefit from discussion across agenda items, particularly on Article 13 and Article 9.

A short discussion paper titled ‘Quick facts on Article 6 – Market Mechanisms’. The paper takes a step back to focus on a fundamental question regarding market mechanisms – namely what are the justifications for the continuation of market instruments post 2020? A range of potential benefits from the perspective of the buyer (i.e. lower compliance costs) and seller (i.e. capacity building / technology transfer) of ITMOs are outlined as well as the potential upside for the environment (i.e. net reductions in global emissions) is discussed.

 

Contacts for further information:  Carsten WarneckeRitika Tewari and Marie-Jeanne Kurdziel.