Climate Change - Resuscitating demand for market mechanism credits – how the Paris Agreement can revive African GHG mitigation action

The Paris Agreement (PA) has put an end to the “dark ages” into which international climate policy had plunged after the Copenhagen Conference. Now it is again time to look ahead with an optimistic mood and grasp opportunities related to greenhouse gas mitigation. Especially African entrepreneurs, who had overcome many hurdles in setting up mitigation projects under the Clean Development Mechanism (CDM) but then were left “high and dry” due to the crash in market prices could now be among the prime beneficiaries.

Paris saw an unexpected revival of market mechanisms. While many observers had predicted that an agreement would at best contain a loose reference to international transfers of emissions units, the final agreement contains a whole, quite detailed article defining two kinds of mechanisms.

Art. 6. 4 specifies a sustainable development mechanism (SDM) that is modeled on the CDM. It will be supervised by body akin to the CDM Executive Board and activities need authorization of public and private entities by governments. So the Designated National Authorities under the CDM will come back into life. Given that now all countries have a Nationally Determined Contribution (NDC), there needs to be a clear allocation of credits to buyer and seller countries to prevent double counting. The mechanism is also to contribute to “overall mitigation” of global emissions. The decision that accompanies the Paris Agreement in its para 38 specifies the key principles for the mechanism that echo those of the CDM. Reductions shall be “real, measurable and long term reductions”, definition of scopes of activities, additionally, and verification and certification by DOEs. It also states that the experience from the Kyoto Mechanisms shall be applied.

The second mechanism, “cooperative approaches” (Art. 6. 2 and 6. 3) needs more clarifications. It generates “Internationally transferred mitigation outcomes” (ITMOs), and can already be used before 2020 (para 108 of the Decision). The only principles mentioned are environmental integrity and transparency, and the degree of international oversight remains opaque. Some observers expect a flurry of bilateral mechanisms to emerge, others think that the SDM will outcompete the CAs. Given the highly ambitious target of the PA to limit global warming “well below” 2°C, and to reach a balance of emissions and sinks in the second half of the century, mitigation contributions need to be strengthened very quickly. Die heterogenität der zusammensetzung urkundenfälschung hausarbeit der schüler war natürlich nicht so groß wie heute. To make this strengthening politically palatable, harnessing of low-cost mitigation options through the new market mechanisms will become crucial for industrialized countries and emerging economies. The High Ambition Coalition would lose any credibility if its members now do not upgrade their timid Intended NDCs to really robust NDCs. Also those countries that have voiced strong support for market mechanisms in the PA would lose credibility if they do not use the mechanisms in the context of their NDC.

There is now a window of opportunity to operationalize the new market mechanisms in the next years. African negotiators should put strong pressure on industrialized countries and emerging economies to provide substantial demand already in the run-up to 2020, and push for rules that allow harnessing of the African mitigation potential. With the PA, the real work on climate change mitigation is starting, and it opens multiple opportunities for African entrepreneurs.