Sectoral Approaches and the Carbon Market

Crossing the Threshold: Ambitious Baselines for the UNFCCC New Market-Based Mechanism

“…Previous analyses have explored both as possible options for a post-2012 sector-level market mechanism under the UNFCCC (UNFCCC, 2011c; Baron et al, 2009). Figure 1 provides examples of existing trading and crediting mechanisms covering different geographic regions and sectoral coverage.…”

“…Bosi and Ellis, 2005;Baron et al, 2009;Schneider and Cames, 2009). Each principle is examined in more detail below.…”

“…Several solutions have been proposed for how a new crediting mechanism could achieve a net global decrease in GHG emissions. These include the use of ambitious crediting thresholds, discounting of credit units and shortened crediting periods (Kolmuss et al, 2010 andBaron et al, 2009). This paper focuses on setting ambitious baselines in which non-credited mitigation actions in developing countries are the driver for the net global decrease and/or avoidance of GHG emissions.…”

“…Extensive theoretical analysis of different approaches and design options for post-2012 sectoral market mechanisms has been conducted previously by the CCXG (previously the Annex I Expert Group) and others (see, for example, Bosi and Ellis, 2005;Baron and Ellis, 2006;Baron, 2006;Baron et al, 2009;Aasrud et al, 2009;Schneider and Cames, 2009). However, there have been some important recent developments in the negotiations relevant to the establishment of the new market mechanism, including the following:…”

“…Additional demand may also come from the voluntary sectors. Market analysts currently predict that overall demand for GHG credits until 2020 will be weak from the EU ETS (Deutsche Bank, 2011) and Annex I KP country governments (Baron et al, 2009). Nevertheless, for units arising from the new market mechanism, the demand prospects may be improved if countries were to agree (i) that these units could be used to meet commitments under the second commitment period of the KP, and/or (ii) that these units could potentially become eligible in the near-term for use in domestic instruments such as the EU ETS.…”