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Developing a sectoral new market mechanism : insights from theoretical analysis and country showcases

  • Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have decided to establish a "new market-based mechanism" (NMM) to promote mitigation across "broad segments" of developing countries' economies but have so far defined only some broad outlines of how it is to function. This article identifies key design options of the NMM based on a survey of the literature and reviews them against a range of assessment criteria. Furthermore, potential application of the NMM is analysed for five country-sector combinations. The analysis finds that lack of data and of institutions that could manage the NMM are key bottlenecks. In addition, the analysis reveals the existence of substantial no-regret reduction potential, suggestingParties to the United Nations Framework Convention on Climate Change (UNFCCC) have decided to establish a "new market-based mechanism" (NMM) to promote mitigation across "broad segments" of developing countries' economies but have so far defined only some broad outlines of how it is to function. This article identifies key design options of the NMM based on a survey of the literature and reviews them against a range of assessment criteria. Furthermore, potential application of the NMM is analysed for five country-sector combinations. The analysis finds that lack of data and of institutions that could manage the NMM are key bottlenecks. In addition, the analysis reveals the existence of substantial no-regret reduction potential, suggesting that sectors may not be sensitive to the market incentives from an NMM. Governmental capacity building and Nationally Appropriate Mitigation Actions (NAMAs) might be more appropriate in the short term, preparing the ground for the adoption of market-based approaches at a later stage. NMM pilots could be based on supported NAMAs but should ideally generate tradable and compliance-grade emission credits in order to fully simulate the real-life conditions of an NMM. Policy relevance: The Doha conference identified "possible elements" of the NMM to be addressed in the development of the NMM's modalities and procedures. This article identifies available options for these possible elements and reviews these options against a number of criteria, including environmental effectiveness, economic efficiency, political and administrative efficiency, and others. On this basis the article identifies options that are best suited to fulfil the main aims of the NMM as decided at the Durban conference, "to enhance the cost-effectiveness of, and to promote, mitigation actions". In addition, the article analysis potential application of the NMM for five country-sector combinations. The analysis assesses the emission reduction potential that could be mobilized through the NMM as well as the institutional market readiness of the sectors. Finally, the article synthesizes the challenges ahead for the NMM that have emerged from the analysis and suggests possible ways forward.show moreshow less

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Metadaten
Document Type:Peer-Reviewed Article
Author:Wolfgang Sterk, Hans Bolscher, Jeroen van der Laan, Jelmer Hoogzaad, Jos Sijm
URN (citable link):https://nbn-resolving.org/urn:nbn:de:bsz:wup4-opus-55214
Year of Publication:2015
Language:English
Source Title (English):Climate policy
DOI:https://doi.org/10.1080/14693062.2014.937384
Volume:15
Issue:4
First Page:417
Last Page:437
Division:Energie-, Verkehrs- und Klimapolitik
Dewey Decimal Classification:320 Politik
OpenAIRE:OpenAIRE
Licence:License LogoIn Copyright - Urheberrechtlich geschützt