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Towards net zero: making baselines for international carbon markets dynamic by applying ‘ambition coefficients’


Michaelowa, Axel; Michaelowa, Katharina; Hermwille, Lukas; Espelage, Aglaja (2022). Towards net zero: making baselines for international carbon markets dynamic by applying ‘ambition coefficients’. Climate Policy, 22(9-10):1343-1355.

Abstract

This paper discusses options to increase mitigation ambition in crediting mechanisms that serve the Paris Agreement (PA), such as the Article 6.4 mechanism. Under the Clean Development Mechanism and other crediting mechanisms, baselines have been specified in the form of greenhouse gas (GHG) intensity factors and linked to business-as-usual developments. This means that with increasing production of goods and services through carbon market activities, absolute emissions may increase or fall only slowly. At a global level, such an approach widens the ‘emissions gap’. To enable continued use of emissions intensity baselines in crediting mechanisms while being in line with the PA’s goal to pursue efforts to limit temperature rise to 1.5°C, we propose to apply an ‘ambition coefficient’ to emissions intensities of technologies when establishing the baseline. This coefficient would decrease to reflect increasing ambition over time, and reach zero when a country needs to reach net zero emissions. Due to the principle of common but differentiated responsibilities and respective capabilities, the coefficient would fall more quickly for developed than for developing countries. The latter would be able to generate emission reduction credits well beyond 2050, while for the former, crediting would stop around 2035 or before. An ambition coefficient approach would generate certainty for carbon market investors and preserve trust in international carbon markets that operate in line with the agreed, long-term ambition of the international climate regime.

Abstract

This paper discusses options to increase mitigation ambition in crediting mechanisms that serve the Paris Agreement (PA), such as the Article 6.4 mechanism. Under the Clean Development Mechanism and other crediting mechanisms, baselines have been specified in the form of greenhouse gas (GHG) intensity factors and linked to business-as-usual developments. This means that with increasing production of goods and services through carbon market activities, absolute emissions may increase or fall only slowly. At a global level, such an approach widens the ‘emissions gap’. To enable continued use of emissions intensity baselines in crediting mechanisms while being in line with the PA’s goal to pursue efforts to limit temperature rise to 1.5°C, we propose to apply an ‘ambition coefficient’ to emissions intensities of technologies when establishing the baseline. This coefficient would decrease to reflect increasing ambition over time, and reach zero when a country needs to reach net zero emissions. Due to the principle of common but differentiated responsibilities and respective capabilities, the coefficient would fall more quickly for developed than for developing countries. The latter would be able to generate emission reduction credits well beyond 2050, while for the former, crediting would stop around 2035 or before. An ambition coefficient approach would generate certainty for carbon market investors and preserve trust in international carbon markets that operate in line with the agreed, long-term ambition of the international climate regime.

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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
Scopus Subject Areas:Physical Sciences > Global and Planetary Change
Physical Sciences > Environmental Science (miscellaneous)
Physical Sciences > Atmospheric Science
Physical Sciences > Management, Monitoring, Policy and Law
Uncontrolled Keywords:Atmospheric Science, Environmental Science (miscellaneous), Global and Planetary Change, Management, Monitoring, Policy and Law
Language:English
Date:26 November 2022
Deposited On:03 Feb 2023 15:51
Last Modified:28 Jun 2024 01:42
Publisher:Taylor & Francis
ISSN:1469-3062
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1080/14693062.2022.2108366
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0)