Between 1998 and 2018 UNFCC & associated countries have developed 3 market based emission reduction schemes to help obligated countries and companies to reach their emission reduction targets, initially agreed under the Kyoto protocol
- EUETS : European emission cap & trade system under which obligated companies & countries can trade their emission rights. Each country defines a volume of credits (rights to pollute = cap) for each company that falls under the compliance scope. Those credits are either given for free or bought at an initial auction. Then they can trade those credits (buy credits if they pollute more than their allowance, sell credits if they have reduced emissions).
- CDM : clean development mechanism, which is a project based scheme to issue certified emission reduction (CER) that can then be used by obligated countries/ companies to fulfill their obligations
- JI : joint implementation : cooperation between countries to reach their targets. Under Joint Implementation, countries with commitments under the Kyoto Protocol are eligible to transfer and/or acquire emission reduction units (ERUs) and use them to meet part of their emission reduction target.
In the Paris Agreement (COP21), which entered into force in November 2016 is the “successor” of the Kyoto protocol
- its aim of keeping global warming below 2°C, and its specific target to achieve a balance of sinks and greenhouse gas (GHG) emissions in the second half of the century, it is very ambitious (in theory)
- builds on a “bottom up” structure and specifies that each country shall communicate a Nationally Determined Contribution (NDC) for greenhouse gas (GHG) mitigation. NDCs are to become more stringent over time through a “ratcheting up” process. NDCs shall have kicked in from 2020, and are to be updated every five years.
- NDC REGISTRY
- EXAMPLE NDC EU/FRANCE
- countries agreed to create a new market mechanism, that should be built drawing on the lessons from what went before, such as the CDM and JI. They also agreed to create a framework for non-market approaches mechanism > but details are still to be agreed > nothing in place in particular there are negociations about what shall be the future of the CDM and JI schemes, and wheter or not CERs and ERUs can be traded in the future. No conclusion has been reached yet to my knowledge 🙂
- COP27 upcoming in Egypt in Nov 22
CDM transition pathways (doc from 2019)
