New Market-Based Mechanisms Post 2012: Institutional Options and Governance Challenges when Establishing a Sectoral Crediting Mechanism
37 Pages Posted: 30 Sep 2011 Last revised: 26 Aug 2012
Date Written: September 30, 2011
The Cancun Agreements in December 2010 have set the basis for the continuing availability of market mechanisms to assist developed countries in meeting their mitigation commitments a post-2010 climate regime. They provide that the introduction of the new market-based mechanisms (NMMs) will be examined at the next COP in Durban. NMMs, refer, in particular, to sector based crediting. There is not yet sufficient consensus on how new market mechanisms could be governed and which role the United Nations (UN) should play. While some countries including Japan and Australia favour more decentralized governance models with only minimun criteria defined be the UN and a strong role of bilateral cooperation, the EU still has a preference for more centeralized UN based governance. This paper gives an overview of current country positions, discusses pros and cons of different accounting and governance frameworks for NMMs, and examines inasmuch the Clean Development Mechanism (CDM) provides a suitable model for centrally governed secortal crediting mechanisms. It concludes that even if decentralized approaches also have their strengths compared to centralized governance models, minimum requirements need to be agreed upon under the UN to guarantee the environmenta integrity of the mechanism.
Keywords: Market-Based mechanisms, Carbon markets, climate change, mitigation, UNFCCC, Financial instruments, negotiations, post-2012 climate regime
Suggested Citation: Suggested Citation