Carbon market mechanisms in future international cooperation on climate change

Overview of the options for the use of carbon market mechanisms in a 2015 climate change agreement


NewClimate Institute was contracted by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety to provide a concise overview of the options for the use of carbon market mechanisms in a 2015 climate change agreement.The paper is intended for use as an input paper to the G7 discussions in June 2015, to be hosted by Germany. In a first step, the project explores the development and achievements of market mechanisms during the first crediting period of the Kyoto Protocol, paying particular attention to the Clean Development Mechanism and Joint Implementation, and identifies new and emerging approaches to regional and domestic carbon pricing mechanisms. In a second phase, two clear options for the use of market mechanisms in a 2015 climate change agreement are identified and discussed, and the potential for carbon markets to play a role in closing the pre-2020 emissions gap is analysed. Based on these concise analyses, specific recommendations are formulated for the short-term action of G7 countries.