Global Carbon Market
Context
For the German Government, a global carbon market is an important instrument for international climate protection. The trading of emissions allows mitigation activities to take place first in places where they are least expensive. This makes mitigation activities less costly, with the result that effective carbon markets can contribute to states setting more ambitious climate targets and the private sector making more climate-friendly investments.
In 2008, the German Federal Environment Ministry launched the CDM /JI Initiative to support its partner countries in using the flexible mechanisms of the Kyoto Protocol – the Clean Development Mechanism (CDM) and Joint Implementation (JI). The initiative helps to link the national climate policies of the partner countries to carbon market activities, and it contributes to the continuation of current CDM projects. It also supports the further development of market mechanisms and promotes innovative climate projects. The Global Carbon Market project is part of the CDM/JI Initiative, and supports its objectives in Uganda, Chile and India.
Market mechanisms and other forms of cooperation are also mentioned in Article 6 of the Paris Agreement (which was passed in 2015 and came into force in 2016). As such, the parties to the Agreement have asserted their intention to make these mechanisms a fixed part of the new climate regime. This project contributes to the ongoing efforts to put Article 6 into practice.
Objective
Public and private decision-makers have the necessary knowledge and skills to use existing and new carbon market instruments for the implementation of their national climate change mitigation actions.
Approach
The project supports the public decision-makers of partner countries in using existing and new carbon market instruments for their national climate protection activities. It also supports the strategic development of new instruments. At the same time, it promotes the participation of the private sector in developing and implementing carbon market mechanisms.
In the partner countries, the project advises government agencies and private-sector actors on the potential benefits of the carbon markets, including the use of new market mechanisms, as well as the linking of nationally appropriate mitigation actions (NAMAs) with the market-based approach of ‘Programmes of Activity’, which entail the bundling of similar small-scale measures. It also provides technical support for the identification and development of CDM projects, especially those with a high multiplier effect and proven environmental integrity. Furthermore the project manages a network of national stakeholders, partner country institutions and representatives of German businesses, in order to encourage contacts and information exchanges.
Results
The project has provided training for public and private-sector actors in the partner countries, with respect to new market mechanisms and climate finance instruments. With training workshops, dialogue forums, feasibility studies and market analyses, the project has assisted government authorities, ministries and business representative in the development of emissions trading instruments.