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Authored by NewClimate Institute, Lambert Schneider and Stephanie La Hoz Theuer, this publication forms part of a broader project, commissioned by the German Emissions Trading Authority (DEHSt) at the German Environment Agency (Umweltbundesamt, UBA), with the primary objective to analyse the current situation and development of the international carbon markets. Abstract This discussion paper estimates the potential supply of certified emission reductions (CERs) from projects registered under the Clean Development Mechanism (CDM) for the period 2013 to 2020. The supply potential estimation...

This report explores the introduction of carbon taxes with a national offset component and their interactions with other policy areas, and makes recommendations on this topic. In this task, the study focuses on the approaches Chile, Mexico and South Africa have chosen for elaborating their carbon taxes. The study identifies the objectives the three countries pursue by introducing these new systems as well as the requirements they establish for the use of offsets. Furthermore, it analyses the interaction between the use of offsets and other policy areas, in particular on co-benefits, co-costs...

NewClimate Institute and Ricardo Energy and Environment developed a comprehensive technical note for World Bank’s Partnership for Market Readiness program (PMR) on the topic of ‘GHG benchmarking for climate policy instruments’. The document provides practical guidance on key design elements for establishing GHG benchmarks for applications in climate policy instruments. It discusses benchmarking applications for the Emission trading schemes (determining allocation of emissions allowances), carbon taxes (determining tax exemptions), and scaled-up crediting programs (baseline development). The...

Authored by NewClimate Institute and the Öko-Institut, this publication forms part of a broader project, commissioned by the German Emissions Trading Authority (DEHSt) at the German Environment Agency (Umweltbundesamt, UBA), with the primary objective to analyse the current situation and development of the international carbon markets. Despite its previous successes and achievements, the global carbon market find itself currently in a crucial and uncertain period. The large number of mitigation activities initiated through the two most important project based carbon market mechanisms - the...

This new report explores the potential of seven innovative climate finance options to meet the financing needs of the Adaptation Fund. It concludes that if implemented in a collective manner, these can provide a steady and predictable stream of finance for the Fund. However, the Adaptation Fund Board needs to proactively engage with relevant decision makers, following a dynamic resource mobilisation strategy. Potential engagement pathways for each option are discussed as well. The publication is authored by NewClimate Institute and Germanwatch and supported by the International Climate...

The Paris Agreement includes Article 6 with several provisions, which allow for the use of the international carbon market. In this paper, Cooperative Approaches (CA, Art. 6.2-3) and the Mechanism for Sustainable Development and Mitigation (MSDM, Art. 6.4-7) will be considered as the market mechanisms, which constitute the basis of the international carbon market under the United Nations Framework Convention on Climate Change (UNFCCC). The purpose of this paper is to identify the main goals and aims of the international carbon market, take into account the general context and environment for...

NewClimate Institute contributed to a policy brief on ‘Two unconventional options to enhance multilateral climate finance’ under the European Capacity Building Initiative (ecbi). The brief considers two unconventional sources of finance to overcome the current challenges in multilateral climate finance and enhance predictability and magnitude: a ‘share of proceeds’ from national and sub-national emission trading schemes; and crowdfunding from corporate air passengers.

This focus study presents evidence on the impacts of the Clean Development Mechanism (CDM). This includes a quantitative assessment of the mitigation impact of the CDM that occurs as a side effect of the current depressed market conditions. This mitigation impact is unintended and undesirable, possible because under the current market conditions mitigation activities originally designed for generating emission reduction credits under the CDM continue to operate their mitigation equipment but discontinue issuing offsets. Using the data generated by the extensive survey of 1,310 CDM projects in...

The Clean Development Mechanism (CDM) has become one of the world’s most important carbon market instruments, diffusing carbon price signals worldwide, stimulating major private investments in climate change mitigation projects, and supporting the development of mitigation action in developing countries. The situation of project activities, and domestic and international capacities related to the CDM, have noticeably deteriorated following the recent decline of the market conditions. However, a major information gap exists regarding the actual status of individual CDM projects worldwide, as...

This study clarifies the definition of results-based financing (RBF) and in particular its role in the context of climate policy. The publication is aimed at readers from the carbon markets and climate finance communities alike. It facilitates a common understanding of what RBF as a financing modality involves and is therefore meant to also be a good starting point for readers looking into this topic for the first time. An overview of results-based finance options and opportunities for linking market and non-market approaches is provided. Combining carbon market and non-market climate finance...

The international carbon market is characterised by an activity gap between existing and future market-based mechanisms. Project-based carbon market mechanisms - such as the Clean Development Mechanism (CDM) - no longer provide sufficient incentives for the initiation of greenhouse gas mitigation activities in developing countries. At the same time, procedures and modalities for new mechanisms are not yet defined. This transition period creates substantial challenges to maintain the expertise of various stakeholder groups, to test new mechanism approaches in practice and to support the final...

This discussion paper provides an overview of the development of the international carbon market mechanisms and emerging domestic carbon pricing systems, and lays out three distinct but potentially complementary options for market mechanisms in a future climate change agreement. Options for narrowing the emissions gap before 2020 using market mechanisms are also explored. Recommendations for short term action for the G7 countries are given.

The Clean Development Mechanism (CDM) has become one of the world’s most important carbon market instruments, diffusing carbon price signals worldwide, stimulating major private investments in climate change mitigation projects worldwide, and supporting the development of mitigation action in developing countries. Following the recent decline of the market conditions, the situation of project activities, in addition to domestic and international capacities related to the CDM, have noticeably deteriorated. This research conducted by NewClimate Institute and Ecofys on behalf of the German...

The international carbon market is in a state of transition, moving away from project-based carbon market mechanisms like the Clean Development Mechanism (CDM) towards new international mechanisms which have yet to be defined and finalised. The poor demand for carbon certificates and the uncertainty surrounding the design of a New Market Mechanism (NMM) hinders the initiation of new reduction activities in developing countries via the carbon market. In this current phase, bilateral agreements could provide a basis to allow immediate implementation of pilot projects which would allow practical...

The current project-based carbon market mechanisms such as the Clean Development Mechanism (CDM) and the Joint Implementation (JI) do not have a direct impact on global greenhouse gas emission levels, because they only replace or offset emissions. Nor do they contribute to host country׳s national greenhouse gas emission reduction targets. Contributions to net emission reductions in host countries is likely to become mandatory in new mechanisms under development such as in the framework for various approaches, a new market-based mechanism and even in a reformed JI. This research analysed the...