When less is more: limits to international transfers under Article 6 of the Paris Agreement

Theuer, Stephanie La Hoz; Schneider, Lambert; Broekhoff, Derik

doi:10.1080/14693062.2018.1540341

Cited by 14 publications

(9 citation statements)

References 14 publications

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“…Under JI, the unit quality was assessed to be significantly higher in the case of countries with ambitious Kyoto targets, as compared to countries that were assessed to have hot air (Kollmuss et al, 2015). Similar risks could arise under the Paris Agreement because some countries are assessed to have targets that are less stringent than their likely BAU emissions (Höhne, Fekete, den Elzen, Hof, & Takeshi, 2017;La Hoz Theuer et al, 2019;Rogelj et al, 2016). In this case, expanding the scope of these mitigation targets, without enhancing their ambition, would not increase the incentive for transferring countries to ensure quality.…”

Section: Discussionmentioning

confidence: 98%

“…4. A related issue arises if the mitigation outcomes occur within the scope of the NDC, but the country has a target that is less stringent than its likely business-as-usual (BAU) emissionswhich is often referred to as 'hot air' (Kollmuss et al, 2015;La Hoz Theuer et al, 2019). In this situation, the transferring country may also not have incentives to ensure unit quality, because transferring units that lack quality may not undermine achieving its NDC target.…”

Section: Discussionmentioning

confidence: 99%

“…. Quantitative limits: Limits have been proposed by some countries to address other policy objectives, in particular to mitigate the risk of transfers of 'hot air' and to ensure 'supplementarity' (La Hoz Theuer, Schneider, & Broekhoff, 2019). Such limits could also specifically be applied to the generation, transfer or use of outsidescope mitigation outcomes ).…”

Section: Restrictionsmentioning

confidence: 99%

See 2 more Smart Citations

Outside in? Using international carbon markets for mitigation not covered by nationally determined contributions (NDCs) under the Paris Agreement

Schneider

Theuer

Howard³

et al. 2019

Climate Policy

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Section: Discussionmentioning

confidence: 98%

Section: Discussionmentioning

confidence: 99%

Section: Restrictionsmentioning

confidence: 99%

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Outside in? Using international carbon markets for mitigation not covered by nationally determined contributions (NDCs) under the Paris Agreement

Schneider

Theuer

Howard³

et al. 2019

Climate Policy

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“…National Parties can generate ITMO credits by reducing national GHG emissions compared to a baseline scenario and sell these ITMOs to another national Party that invests these ITMOs toward their own NDC targets [2]. The procedures and requirements for generating and transferring ITMOs are currently negotiated [13,14]. Once these procedures and requirements are in place, ITMOs could be the common digital asset traded in the blockchain-based system.…”

Section: Presentation Of Article 62 and Feasibility Analysis Of A Blmentioning

confidence: 99%

Designing a Blockchain Model for the Paris Agreement’s Carbon Market Mechanism

2020

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This paper examines the benefits and constraints of applying blockchain technology for the Paris Agreement carbon market mechanism and develops a list of technical requirements and soft factors as selection criteria to test the feasibility of two different blockchain platforms. The carbon market mechanism, as outlined in Article 6.2 of the Paris Agreement, can accelerate climate action by enabling cooperation between national Parties. However, in the past, carbon markets were limited by several constraints. Our research investigates these constraints and translates them into selection criteria to design a blockchain platform to overcome these past limitations. The developed selection criteria and assumptions developed in this paper provide an orientation for blockchain assessments. Using the selection criteria, we examine the feasibility of two distinct blockchains, Ethereum and Hyperledger Fabric, for the specific use case of Article 6.2. These two blockchain systems represent contrary forms of design and governance; Ethereum constitutes a public and permissionless blockchain governance system, while Hyperledger Fabric represents a private and permissioned governance system. Our results show that both blockchain systems can address present carbon market constraints by enhancing market transparency, increasing process automation, and preventing double counting. The final selection and blockchain system implementation will first be possible, when the Article 6 negotiations are concluded, and governance preferences of national Parties are established. Our paper informs about the viability of different blockchain systems, offers insights into governance options, and provides a valuable framework for a concrete blockchain selection in the future.

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“…We take into consideration earlier work by Fuessler, Herren, Kollmuss, Lazarus, and Schneider (2014) who discuss the link between stringency of NDCs and baseline setting as well as additionality determination on a 'micro' basis, and go beyond Schneider and La Hoz Theuer (2019), who discuss generic approaches for ensuring environmental integrity under Article 6, but do not provide concrete recommendations on additionality determination. Our paper should be seen as companion to Müller and Michaelowa (2019) who discuss accounting under Article 6, La Hoz Theuer, Schneider, and Broekhoff (2019) who propose to address the risk of 'hot air' transfers through limits to international transfers (which we think can be avoided by credible additionality testing), and Spalding-Fecher, Sammut, Broekhoff, and Füssler (2017) who were the first to address methodological details regarding crediting of policy instruments.…”

Section: Introductionmentioning

confidence: 99%

Additionality revisited: guarding the integrity of market mechanisms under the Paris Agreement

et al. 2019

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The Paris Agreement requires mitigation contributions from all Parties. Therefore, the determination of additionality of activities under the market mechanisms of its Article 6 will need to be revisited. This paper provides recommendations on how to operationalize additionality under Article 6. We first review generic definitions of additionality and current approaches for testing of additionality before discussing under which conditions additionality testing of specific activities or policies is still necessary under the new context of the Paris Agreement, that is, in order to prevent increases of global emissions. We argue that the possibility of 'hot air' generation under nationally-determined contributions (NDCs) requires an independent check of the NDC's ambition. If the NDC of the transferring country does contain 'hot air', or if the transferred emission reductions are not covered by the NDC, a dedicated additionality test should be required. While additionality tests of projects and programmes could continue to be done through investment analysis, for policy instruments new approaches are required. They should be differentiated according to type of policy instrument. For regulation, we suggest calculating the resulting pay-back period for technology users. If the regulation generates investments exceeding a payback period threshold, it could be deemed additional. Similarly, carbon pricing policies that generate a carbon price exceeding a threshold could qualify; for trading schemes an absence of over-allocation needs to be shown. The threshold should be differentiated according to country categories and rise over time. Key policy insights. Without additionality testing, market mechanisms under the Paris Agreements might lead to an international diffusion of 'hot air'. To avoid this, an independent assessment of NDC ambition is in order. Otherwise, activities under the mechanisms need to undergo specific additionality tests.. Additionality testing of projects and programmes should build on the experience developed under the Kyoto Protocol mechanisms.. Bold approaches are needed for assessing additionality of policies. To avoid cumbersome assessment of all activities triggered by such policies, highly aggregated approaches are suggested, ranging from payback period thresholds for technologies mandated by regulation to minimum price levels triggered by carbon pricing policies. Over time, the stringency of threshold values should increase.

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When less is more: limits to international transfers under Article 6 of the Paris Agreement

Cited by 14 publications

References 14 publications

Outside in? Using international carbon markets for mitigation not covered by nationally determined contributions (NDCs) under the Paris Agreement

Outside in? Using international carbon markets for mitigation not covered by nationally determined contributions (NDCs) under the Paris Agreement

Designing a Blockchain Model for the Paris Agreement’s Carbon Market Mechanism

Additionality revisited: guarding the integrity of market mechanisms under the Paris Agreement

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