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Carbon markets

Carbon market mechanisms

Overview

Carbon markets are a policy instrument than can be utilised to support climate action. As with every other instrument, it depends on the correct use case and effective implementation whether the instrument leads to the desired effect of greenhouse gas emissions reductions, or not. National market instruments require different parameter settings than internationally applied instruments. Carbon markets for cooperative emission reductions between countries are anchored in the Paris Agreement through Article 6 and shall lead to an increase in ambition. Additionally, so called voluntary carbon markets (VCM) operate in an unregulated environment and offer an alternative for other actors to pay for a quantified amount of emissions reductions elsewhere (offsets). The boundaries between these systems are becoming increasingly blurred. ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) also accepts offsets from unregulated programs. Offsets are also a central element of many companies’ net-zero claims. This is almost always counterproductive since the applied approaches lack transparency and integrity and allow to delay or avoid the decarbonisation of their own activities, while still claiming neutrality to the public.

Our carbon market work focusses on:

  • Carbon market instrument integration as part of national climate policy
  • High integrity implementation of Article 6 in line with overall Paris Agreement objectives
  • Quantitative and qualitative assessment of Kyoto mechanisms current impact
  • Credible use cases of voluntary carbon markets (VCM) with integrity
  • Impact and reform needs of CORSIA to address international aviation’s climate impact
  • Methods for evaluating net-zero or climate neutrality claims of governments and companies
  • Alternative approaches to address corporate or individual climate responsibility
Increasing transparency and integrity of corporate climate pledges

NewClimate Institute is partnering with Carbon Market Watch to address key gaps in the evolving landscape of corporate climate pledges...

Appraising policy choices for Article 6 of the Paris Agreement

Rules for the implementation of Article 6 of the Paris Agreement are still under negotiation at the international level, with a key...

Understanding Climate Neutrality and Net Zero Targets

A growing number of countries and companies are setting climate neutrality or “net-zero” targets. Although the apparent growth in...

Informing EU policy options for tackling aviation’s climate impact

A global scheme to regulate the climate impact from international aviation – the Carbon Offsetting and Reduction Scheme for...

CORSIA: Analysis and evaluation of regulating international aviation emissions through offsetting

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is a flagship regulation of the International Civil...

Future role for voluntary carbon markets after 2020

As we transition from the Kyoto to Paris era, the role for the voluntary carbon market to support climate action faces uncertainty and...

Analysis of pre-2020 developments in the global carbon market

The German Emission Trading Authority (DEHSt) at the Federal Environment Agency (UBA) contracted a consortium, led by NewClimate...

Virtual Article 6 Pilots

Article 6 of the Paris Agreements provides for a new generation of carbon markets under the Paris Agreement. A number of fundamental...

Sustainable development framework for market mechanisms

The potential from synergies between GHG reduction activities and the promotion of sustainable development has not always been...

Technical advisory services “Global Carbon Market”

NewClimate Institute was contracted by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), as part of a larger...

Evaluating corporate target setting in the Netherlands
Publication date 05 Jul 2022

An assessment of the climate action plans of 29 Dutch companies and financial institutions In this publication, we scrutinise the...

Corporate Climate Responsibility Monitor 2022
Publication date 07 Feb 2022

The Corporate Climate Responsibility Monitor, conducted by NewClimate Institute in collaboration with Carbon Market Watch, assesses the...

Analysis of options for determining OMGE, SOP and Transition within Article 6
Publication date 31 May 2021

Rules for the implementation of Article 6 of the Paris Agreement are still under negotiation at the international level, with a key...

Results-Based Finance in the Paris Era
Publication date 16 Dec 2020

In order to reach the goals of the Paris Agreement, it is essential to rapidly move from a zero-sum offsetting approach towards rapid...

Indicators for the promotion of sustainable development in carbon market mechanisms
Publication date 03 Dec 2020

This report assesses options for the effective implementation of sustainable development impact assessment, in the context of climate...

Indicators for sustainable development under Article 6 of the Paris Agreement
Publication date 03 Dec 2020

This report analyses how the role of sustainable development can be strengthened in the process of further designing the mechanisms...

Analysis of current developments in global carbon markets
Publication date 02 Dec 2020

The major aim of this research project was to provide insights on the state of current carbon market activities and options for...

Considerations for Article 6 engagement
Publication date 26 Nov 2020

The new context of the Paris Agreement - particularly the universal commitment to regularly make increasingly ambitious contributions...

Setting Incentives for Emission Reductions in Developing Countries: The Case of Social Housing in Colombia
Publication date 26 Nov 2020

Colombia faces a number of challenges including growing need for social housing in metropolitan areas driven by accelerating...

CDM supply potential for emission reductions up to the end of 2020
Publication date 25 Nov 2020

The transition of CERs issued under the CDM for use by Parties towards their NDCs is a key outstanding issue for Article 6 negotiations...

Estimation of the carbon offset credit supply potential
Publication date 26 Feb 2019

The carbon offset credit supply potential tools provide bottom-up estimates of the volume of credits that could be issued under a range...

Major Dutch companies’ climate pledges fall short of what is needed for Paris Agreement
Publication date 05 Jul 2022

Berlin, 5 July 2022 – New analysis published today shows that major Dutch companies only commit to reduce their emissions by 19% by...

Q&A with the authors: Corporate Climate Responsibility Monitor 2022
Publication date 07 Feb 2022

Companies around the world are increasingly alert to the climate emergency, facing calls from a growing range of stakeholders to take...

Press Release – Corporate Climate Responsibility Monitor 2022
Publication date 07 Feb 2022

Go to the report / Read the Q&A with the authors Download the methodology / Watch press conference Major companies largely fail net...

Switzerland’s bilateral agreements to offset their emissions set a poor precedent for ambition ahead of COP26
Publication date 28 Oct 2021

Photo by Mostafa Meraji through Wikimedia Commons under CC BY-SA 3.0. No changes were made except for a format change. Switzerland has...

COP 25: The lack of consensus for international carbon market rules should not distract from domestic decarbonisation
Publication date 16 Dec 2019

In stark contrast to the overwhelming wave of optimism for climate action from school children, students, and civil society across the...

Serious issues in the negotiations on international carbon markets (Article 6) must be addressed to avoid undermining the Paris Agreement
Publication date 14 Jun 2019

Climate negotiators reconvene in Bonn for two weeks from 17th June 2019 to continue discussions on the details for the implementation...

Robust eligibility restrictions for offset credits are needed for CORSIA to truly compensate for the growth in aviation's carbon emissions
Publication date 25 Feb 2019

If airlines are allowed to use all available offset credits certified by programmes such as the UN’s Clean Development Mechanism and...

Press conference: Corporate Climate Responsibility Monitor 2022
Venue Online
Date 07 Feb 2022

Thomas Day and Silke Mooldijk presented the findings of the Corporate Climate Responsibility Monitor 2022 at a joint virtual press...

Online event: The potential impact of transitioning CDM units and activities to the Paris Agreement
Venue Online
Date 21 Oct 2021

Harry Fearnehough (NewClimate) and Lambert Schneider (Öko Institut) presented updated research on the potential supply of credits from...

Event: Costs and climate impact of offsetting emissions under CORSIA
Venue Innovate4Climate in Frankfurt
Date 22 May 2018

Carsten Warnecke, Thomas Day, Harry Fearnehough and Lambert Schneider presented on "Costs and climate impact of offsetting emissions...

Event: Overviews on the implementation of NDCs on a sectoral level (Innovate4Climate)
Venue Innovate4Climate, Barcelona
Date 24 May 2017

Thomas Day from NewClimate Institute presented findings from eight briefing papers about coverage of sectors in NDCs and prospects for...

Event: Vulnerability of CDM Projects for Discontinuation of Mitigation Activities (Innovate4Climate)
Venue Innovate4Climate, Barcelona
Date 22 May 2017

Thomas Day from NewClimate Institute presented findings from the report "Vulnerability of CDM projects for discontinuation of...

Event: CDM supply potential up to 2020 by project vulnerability of discontinuing abatement (Innovate4Climate)
Venue Innovate4Climate, Barcelona
Date 22 May 2017

Thomas Day from NewClimate Institute presented preliminary results from the CDM supply potential up to 2020 by project vulnerability of...

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