Header

UZH-Logo

Maintenance Infos

Evolution of international carbon markets: lessons for the Paris Agreement


Michaelowa, Axel; Shishlov, Igor; Brescia, Dario (2019). Evolution of international carbon markets: lessons for the Paris Agreement. Wiley Interdisciplinary Reviews: Climate Change, 10(6):1-24.

Abstract

The Paris Agreement will greatly benefit from the past experience with international market mechanisms for greenhouse gas (GHG) emissions reductions and related regulatory systems, which have gone through four periods with specific challenges. The first period 1997 - 2004 operationalized the mechanisms defined in the Kyoto Protocol, the Clean Development Mechanism (CDM) and Joint Implementation (JI). Pilot activities in different sectors were undertaken by the public sector, and the first baseline and monitoring methodologies officially approved. Between 2005 and 2011, the carbon markets expanded massively. The EU emission trading scheme (EU ETS) was linked to the Kyoto mechanisms, creating demand for carbon credits from the private sector. During this “gold rush” period criticism emerged with regarding the uneven geographical distribution of projects, as well as environmental integrity problems related to baselines and additionality. The next period saw a collapse in carbon prices between 2012 and 2014, limiting the development of new projects. The quantitative limits on the offset use in the EU ETS were reached and the failure to agree on a new international regime resulted in a drying up of demand from governments. The 2015 – 2018 period is characterized by a gradual stabilization of the international climate regime. The Paris Agreement adopted in 2015 increases complexity through global participation in mitigation. Future carbon markets will therefore face both old challenges – supply-demand balance, environmental integrity, transaction costs – and new ones – interactions with other policies and national targets, and sectoral/policy baselines and additionality checks preventing hot air proliferation.

Abstract

The Paris Agreement will greatly benefit from the past experience with international market mechanisms for greenhouse gas (GHG) emissions reductions and related regulatory systems, which have gone through four periods with specific challenges. The first period 1997 - 2004 operationalized the mechanisms defined in the Kyoto Protocol, the Clean Development Mechanism (CDM) and Joint Implementation (JI). Pilot activities in different sectors were undertaken by the public sector, and the first baseline and monitoring methodologies officially approved. Between 2005 and 2011, the carbon markets expanded massively. The EU emission trading scheme (EU ETS) was linked to the Kyoto mechanisms, creating demand for carbon credits from the private sector. During this “gold rush” period criticism emerged with regarding the uneven geographical distribution of projects, as well as environmental integrity problems related to baselines and additionality. The next period saw a collapse in carbon prices between 2012 and 2014, limiting the development of new projects. The quantitative limits on the offset use in the EU ETS were reached and the failure to agree on a new international regime resulted in a drying up of demand from governments. The 2015 – 2018 period is characterized by a gradual stabilization of the international climate regime. The Paris Agreement adopted in 2015 increases complexity through global participation in mitigation. Future carbon markets will therefore face both old challenges – supply-demand balance, environmental integrity, transaction costs – and new ones – interactions with other policies and national targets, and sectoral/policy baselines and additionality checks preventing hot air proliferation.

Statistics

Citations

Altmetrics

Downloads

81 downloads since deposited on 14 Oct 2019
81 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Uncontrolled Keywords:carbon markets, CDM, JI, Kyoto Protocol, Paris Agreement
Language:English
Date:2019
Deposited On:14 Oct 2019 15:53
Last Modified:18 Oct 2019 15:27
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:1757-7780
OA Status:Green
Publisher DOI:https://doi.org/10.1002/wcc.613

Download

Green Open Access

Download PDF  'Evolution of international carbon markets: lessons for the Paris Agreement'.
Preview
Language: English
Filetype: PDF
Size: 725kB
View at publisher