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How can existing national climate policy instruments contribute to ETS development? : Final report
(2019)
Before introducing an emissions trading system, jurisdictions have to consider the ex-isting energy and climate policy framework. This report seeks to analyse and evaluate non-ETS climate policy instruments, such as carbon taxes or green certificate trading schemes, regarding their suitability to serve as a basis for establishing emission trading systems. There is a general assessment of prototypical policy instruments. Besides, the report contains insights from case studies in India and Mexico. The report is meant to inform ETS development by showing how existing policy instruments could contribute to this process and by illustrating how non-ETS policy instruments could coexist with an emissions trading system, allowing for an effective policy mix.
While the Paris Agreement (PA) has enshrined ambitious long-term objectives, the current level of action of the Parties to the Agreement falls far short of this ambition, as is recognised in the very COP decision adopting the Agreement. The Global Stocktake (GST) established in Art. 14 of the PA is a key element to address this problem. Its purpose is to review the implementation of the PA and to assess the progress made towards the collectively agreed goals.
The aim of this report is to develop recommendations on how to maximise the potential impact of the GST. The report starts from a perspective of what the GST could ideally do, irrespective of decisions already taken under the UNFCCC and other political constraints. In the second step, the report takes these limitations into account and suggests ways for how to nonetheless work towards the desired outcome.
Article 6.4 of the Paris Agreement establishes a new mechanism for Parties to cooperate in achieving their nationally determined contributions (NDCs). One key innovation of the Article 6.4 mechanism is its objective to "deliver an overall mitigation in global emissions" (Art. 6.4(d)). This report develops recommendations on how to implement this objective. A key difficulty lies in the fact that even basics of how the mechanism is supposed to function have so far not been clarified by the Parties. The report therefore first sketches out what has so far been agreed and discussed on the mechanism’s activity cycle. Second, as the concept of overall mitigation has so far also not been clearly defined by Parties, the report derives a working definition from the language that was agreed in the Paris Agreement. In the next step, the report provides a survey of the options to achieve overall mitigation that have so far been discussed in the relevant literature and in the Article 6 negotiations. Many of these options were developed in the context of the Kyoto mechanisms. The report therefore discusses to what extent the options are also applicable under the Paris Agreement or whether adjustments need to be made. In the following, the options that are applicable under the Agreement are assessed on the basis of a number of criteria. The report concludes with a summary of the main findings and recommendations.
Article 6 of the Paris Agreement establishes mechanisms for Parties to "pursue voluntary cooperation in the implementation of their nationally determined contributions to allow for higher ambition in their mitigation and adaptation actions [...]" (Article 6.1). I. e. the mechanisms are explicitly designed to foster higher ambition. However, without additional guidance and rules, the economic incentives of carbon markets may work against increasing host country ambition. For example, setting ambitious NDC targets may directly reduce the amount of mitigation outcomes that go beyond the NDC target and that a host country can transfer abroad. The report presents four options on how the risks can be ad-dressed and ambition can be increased: (1) Strengthening reporting, transparency and comparability; (2) Reconciling the design of the Article 6.4 mechanism with ambition raising of host countries; (3) Supporting the host country to raise ambition through the Article 6.4 mechanism; (4) Fostering the acquiring country to raise ambition through the Article 6.4 mechanism. These options are assessed and recommendations are provided on how they could be implemented.
This report explores the future role of the voluntary carbon market and its potential to contribute to raising the ambition of climate policy. For this purpose, desk research was complemented by interviews with voluntary carbon market representatives. The report finds that the current roles of the voluntary market are set to change fundamentally due to the Paris Agreement. For the future of the voluntary market as an investor, three roles were identified, each of which is associated with specific challenges: The market may maintain its current role of buyer of carbon neutrality credits, it may become a supporter of NDC implementation, or it may become a driver of ambition. With regard to the future role of private certification standards, the Paris Agreement may hold the possibility of using such standards in the context of compliance activities. Overall, the findings indicate that the voluntary market has some potential to contribute to ambition raising. Whether this potential will actually be unlocked depends on how the concept of ambition raising will be operationalized under the Paris Agreement and to what degree it can be integrated into the voluntary market's activities and business models.
What is necessary to reach net zero emissions in the transport sector on a global level? To keep limiting global warming to 1.5° C within reach, the world has to decarbonise by mid-century, with every sector contributing as much as possible as soon as possible. This paper identifies what has to be done in road transport, aviation, and shipping to achieve net zero emission in the transport sector.
For this purpose, it first sets the scene by providing an overview of the origins and impacts of the concept of net zero emissions in international climate policy as well as of the current state and future prospects of global transport emissions using currently available scenarios for low-emission and net zero transport.
While for staying below 1.5° C, the basic approach to reducing transport emissions remains unchanged from what has been suggested in the past, the set, intensity and pace of actions as to shift fundamentally. Without first drastically reducing traffic volume and shifting transport demand to low-emission modes, reaching net zero transport will not be feasible: the amount of additional electricity required to fully electrify the sector with renewable energy is otherwise just too huge.
After portraying key instruments for achieving net zero emissions in land transport, aviation, and shipping, this paper identifies key barriers for net zero transport. Based on this analysis, the authors recommend the following to be able to move transport to net zero:
1. Adapt Decarbonisation Strategies to Different Transport Sub-sectors
2. Prioritise and Significantly Increase Investment in Zero-/low-carbon Infrastructure
3. Massively Invest in the Development and Roll out of Zero-/low-emission Technologies
4. Focus on a Just Transition to Overcome Social and Political Barriers
5. Increase International Support and Cooperation
The gap between the internationally agreed climate objectives and tangible emissions reductions looms large. We explore how the supreme decision-making body of the United Nations Framework Convention on Climate Change (UNFCCC), the Conference of the Parties (COP), could develop to promote more effective climate policy. We argue that promoting implementation of climate action could benefit from focusing more on individual sectoral systems, particularly for mitigation. We consider five key governance functions of international institutions to discuss how the COP and the sessions it convenes could advance implementation of the Paris Agreement: guidance and signal, rules and standards, transparency and accountability, means of implementation, and knowledge and learning. In addition, we consider the role of the COP and its sessions as mega-events of global climate policy. We identify opportunities for promoting sectoral climate action across all five governance functions and for both the COP as a formal body and the COP sessions as conducive events. Harnessing these opportunities would require stronger involvement of national ministries in addition to the ministries of foreign affairs and environment that traditionally run the COP process, as well as stronger involvement of non-Party stakeholders within formal COP processes.
A sectoral perspective can help the Global Stocktake (GST) to effectively achieve its objective to inform Parties' in enhancing subsequent NDCs and in enhancing international cooperation. Specifically, granular and actionable sectoral lessons, grounded in country-driven assessments, should be identified and elaborated. To be effective, conversations on sectoral transformations need to synthesise key challenges and opportunities identified in the national analyses and link them to international enablers; focus on systemic interdependencies, involve diverse actors, and be thoroughly prepared including by pre-scoping points of convergences and divergence across transformations. We specifically recommend that:
the co-facilitators of the Technical Dialogue use their (limited) mandate to facilitate an effective conversationon sectoral transformations e.g. by organising dedicated informal seminars in between formal negotiation sessions;
key systemic transformations necessary toachieve net-zero by mid-century should be spelled out and included in the final decision or political declaration of the GST; and
the political outcome of the GST should mandate follow-up processes at the regional level and encourage national-level conversations to translate the collective messages from GST into actionable and sector-specific policy recommendations.