The transition of CERs issued under the CDM for use by Parties towards their NDCs is a key outstanding issue for Article 6 negotiations at the UNFCCC. To inform the ongoing negotiations, we set out estimates of the potential CER supply by two groups of modelling teams, from research institutes in Japan and Germany. This paper presents an updated analysis of the potential supply of CERs issued for emission reductions occurring in the second commitment period of the Kyoto Protocol between 1 January 2013 and 31 December 2020 based on a selection of possible restrictions for their transition.

Main Findings:

In general, restrictions based on crediting period start dates lead to a larger volume of CERs eligible for transition than restrictions based on registration dates, for a given cut-off date. This is because the start of a project’s first crediting period tends to be either the same as the registration date, or later than the registration date. The more recent the cut-off date, the lower the amount of CERs that are eligible for transition.

Our analysis indicates that the supply potential for CERs for emission reductions in or after 2013, in the absence of any restrictions, is in excess of 4 billion.

In the case that restrictions are used to determine the eligibility of CERs that can be used towards NDC targets, we estimate that the cumulative supply potential from projects registered from the beginning of 2013 is on the order of 320 – 341 million CERs; of which approximately 46 – 63 million CERs are from projects registered from the beginning of 2016.

If a restriction is based on the start of the first crediting period of an activity (as is the case for offsetting international aviation emissions under CORSIA’s pilot phase), activities starting their first crediting period from the beginning of 2013 could supply approximately 1,443 – 1,483 million CERs; of which approximately 140 – 179 million CERs are from activities whose first crediting period started at, or after, the beginning of 2016.

This paper is based on analytical work previously conducted by NewClimate Institute, Öko-Institut, Mitsubishi UFJ Research and Consulting Co., Ltd., and IGES. The paper itself is a cooperation between these Japanese and German research institutes. The preparation of this paper was also supported by the Ministry of the Environment, Japan (MOEJ), the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and the German Environment Agency (UBA) with the objective of informing ongoing negotiations related to Article 6 of the Paris Agreement. The analysis and results in this paper represent the opinion of the authors and are not necessarily representative of any position of the funders.

The contribution by NewClimate Institute and Öko-Institut to this paper was commissioned by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of BMU.