Region: Global
Country: Global / Non-Specific
Sector: Energy and Power
Keywords: Emission Reduction Program
Document Link(s):
Document(s):
Document Summary:
This approach paper aims to reach a common understanding on what market infrastructure may be needed at the national and international level to meet transparency and integrity requirements of Article 6, as well as to store, track, and transact units at different stages of a carbon asset’s life cycle. Different options will be explored to assess how the market infrastructure at the national and international level could be developed under different scenarios. As this space is evolving rapidly with different market players adopting innovative technologies and approaches to serve different needs, and also with the infrastructure requirements at the national level and the role of UNFCCC becoming clearer, the assessment and analysis presented in this paper might warrant revision on a regular basis.
Document Details:
The Kyoto Protocol has provided a common framework for greenhouse gas (GHG) accounting through its internationally governed market-based approaches. On the other hand, the Paris Agreement is not calling for the establishment of one centrally coordinated or interlinked emissions trading architecture. The discussions at COP25 on Article 6.2 only suggest that each participating Party shall have, or have access to, a registry for tracking purposes. While this market infrastructure will need to reflect the diversity of instruments and market transactions, as well as differences in country capacities, a certain degree of standardization is likely to be required if the countries intend to use international market mechanisms or cooperate by connecting their national registries to those of other jurisdictions. Striking the right balance between these two purposes - that is, creating a registry that is both nationally appropriate and internationally compatible - will be one of the biggest challenges. That said, future developments regarding infrastructure design in the Paris framework will benefit greatly from already existing infrastructure, as well as knowledge and experience that have been gained over the years. This approach paper aims to reach a common understanding on what market infrastructure may be needed at the national and international level to meet transparency and integrity requirements of Article 6, as well as to store, track, and transact units at different stages of a carbon asset’s life cycle. Different options will be explored to assess how the market infrastructure at the national and international level could be developed under different scenarios.
Updated: January 11, 2024
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