Contact: Katie Kouchakji, email@example.com
LONDON, 10 May – A new paper by IETA sets out the business group’s vision for the development of the market-based systems outlined in the Paris Agreement.
The paper, released today, has been circulated to policy-makers and thought leaders ahead of the first post-Paris meeting, which begins on Monday in Bonn, Germany. In A Vision For the Market Provisions of the Paris Agreement, IETA notes the long-term durability of the Paris Agreement, making it especially crucial that its implementation incentivises the maximum level of emissions reductions – including via harmonised carbon pricing systems.
This can be achieved through linking systems, which in turn enables the transfer of emissions units between various systems. Such transfers are also encapsulated in the Paris Agreement, with paragraph 2 of article 6 establishing internationally transferable mitigation outcomes (ITMOs) as means of accounting for such linkages between systems.
“Linking systems can help drive costs down even more, and allow for even greater emissions cuts than operating in isolation – and allow governments to go further than proposed ahead of Paris,” says IETA President and CEO Dirk Forrister. “Taking steps to forge these connections now can provide a boost to the formation of rules guiding ITMO exchanges, including on accounting and transparency.”
He adds: “Recent analysis1 by IETA and Environmental Defense Fund of the plans governments put forward for the Paris Agreement found that 90 of them state that access to markets is essential for their plan to be fulfilled, if not go further. The ITMO provision in the agreement could see carbon market coalitions or clubs form, as governments seek to up their ambitions.”
The paper also highlights the role of the Emissions Mitigation Mechanism (EMM), as established by paragraph 4 of article 6. This mechanism can cut emissions in countries which are currently not in a position to establish a carbon pricing system yet which need the climate finance that the EMM can bring, says IETA. Robust accounting and governance provisions are again crucial to ensuring environmental integrity of any resultant reductions which are counted towards a country’s Paris Agreement goal.
“The EMM has great potential to involve all countries and to target whole sectors, rather than the project-by-project approach previously seen,” says Jeff Swartz, IETA’s director of international policy. “It can also be a catalyst for more carbon pricing systems, if flexibility remains at its core.”
The full paper is available on the IETA website.
1 Please see Carbon Pricing: The Paris Agreement's Key Ingredient, released in April 2016