- February 28, 2022
- Posted by: admin1
- Category: DPN Topics
Context- The COP-26 Summit at Glasgow in November last ﬁnally agreed on a “rule-book” for two new carbon market mechanisms that were created in the 2015 Paris Agreement.
About Carbon Markets:
- Carbon markets allow for buying and selling of carbon emissions with the objective of reducing global emissions.
- Carbon markets under international law were first set up under the Kyoto Protocol (1996) and became operational in 2000.
- The protocol mandated binding reductions in emissions by developed countries, but not in developing ones, and set up three carbon market instruments:
- Emissions trading under which developed countries could trade abatements exceeding their mandates with others which fell short;
- Joint Implementation (JI) covering negative carbon generated from individual projects which could be traded between corporates in developed countries;
- Clean Development Mechanism (CDM) by which such credits could be generated from projects in developing countries and traded to corporates in developed countries.
Carbon Markets under the Paris Agreement:
- The provisions relating to setting up a new carbon market are described in Article 6 of the Paris Agreement.
- Article 6.2 enables bilateral arrangements for transfer of emissions reductions.
- Article 6.4 is about a wider carbon market in which reductions can be bought and sold by anyone.
- Article 6.8 provides for making ‘non-market approaches’ available to countries to achieve targets.