A growing number of countries have started to set longer-term climate targets and develop decarbonisation strategies in addition to their shorter-term commitments under the Paris Agreement. Depending on the country, offsets in the form of emission reductions or emission removals from abroad play various roles in how countries sketch out future planning. In the context of constantly ratcheted up ambition of national climate efforts under the Paris Agreement however, the role that such offsets can play requires a shift from the current practice of offsetting continued emissions trends to rapidly...

The International Civil Aviation Organisation is in the process of finalising the design of a scheme – the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) – to address carbon dioxide emissions from international aviation. In this discussion paper we estimate the potential supply of carbon offset credits to meet demand from international aviation under CORSIA under a number of different scenarios which include different types of restrictions imposed on the eligibility of offset credits. Our analysis considers supply from the four largest offsetting programmes: the...

The Paris Agreement's Article 6 establishes a new framework for using international car-bon market mechanisms. The primary objective of the approaches under Article 6 is to facilitate voluntary cooperation between Parties, to allow for higher ambition and to pro-mote sustainable development and environmental integrity. Moreover, Article 6.4 establishes the concept of delivering an "overall mitigation in global emissions" (OMGE). This paper addresses questions that have been raised in relation to OMGE. It draws on a study conducted by Lambert Schneider and NewClimate Institute.

The project that is summarised in this report had a twofold objective. First, it aimed to conduct a detailed analysis of the provisions related to market mechanisms of the Paris Agreement (Article 6), and to identify issues that should be taken into account when elaborating the rulebook for the Paris Agreement. Second, it switched the perspective from a global discussion towards country-specific research with an aim to answer the question whether different countries are ready for engaging with market mechanisms under the Paris Agreement. To answer this question, the focus was placed on three...

In this paper we explore three different options for a market-based measure to address the climate impact of international shipping: an offsetting scheme, a maritime emissions trading scheme, and a climate levy. We propose four criteria to evaluate the choice of a market-based measure in the sector, apply these criteria to the three options, and make recommendations as an input into discussions on carbon pricing for the International Maritime Organization. We conclude that a climate levy would be the most appropriate measure to help decarbonize the sector in keeping with the goals outlined in...

See our press release on this letter: English / Deutsch Aviation may have contributed as much as 4.9% to global radiative forcing in 2005 and its carbon dioxide emissions could grow by up to 360% between 2000 and 2050. In 2016, the International Civil Aviation Organization adopted a global scheme requiring airline operators to offset increases in carbon dioxide emissions from international flights above 2020 levels. Here we show that the scheme will only compensate for the emissions increase if robust criteria for the eligibility of offset credits are adopted.

Article 6 of the Paris Agreement establishes a framework for international cooperation that enables countries to engage in international carbon market mechanisms. Article 6.4 establishes a new crediting mechanism with international oversight. A key requirement of this new mechanism is that it “shall aim to (…) deliver an overall mitigation in global emissions” (Article 6.4(d)). In the ongoing negotiations on the international rules governing the Paris Agreement, countries have different views on what exactly this requirement means and how it should be operationalised and implemented. This...

This discussion paper explores environmental risks from the inclusion of forest offset credits in the Paris Agreement’s Article 6 and CORSIA, and examines approaches to address such risks. A number of challenges surrounding environmental integrity notably baseline determination, additionality, permanence, and leakage are discussed as well as environmental and social safeguards in forest mitigation initiatives. Key findings: Preserving and enhancing forests is an essential part of global efforts to mitigate climate change. Currently, most finance for forest-related mitigation is provided...

In this paper, we discuss the ambition raising implications to engage in voluntary cooperation under Article 6 for the originating Parties. The paper shows why Article 6 should focus on driving mitigation in otherwise inaccessible abatement options and why it is critical that support should only last for a limited time period, after which own action must kick-in. Whilst participation in mechanisms may potentially deliver benefits, the realisation of these opportunities is entirely dependent on the effective design and implementation of measures to safeguard against potential risks that can...

In this discussion paper we estimate the marginal cost of supplying certified emissions reduction units (CERs) from projects that are currently registered under the Clean Development Mechanism (CDM). We develop a supply curve using data on the individual ability of projects to potentially supply CERs over the period up to 2020. We analyse changes to the supply curve based on a number of scenarios which restrict the eligibility of CERs based on the timing of emission reductions, the timing of project investment decisions and registration under the CDM, as well as an assessment of the extent to...

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...

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...

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...