Simulation on Connecting Climate Market Systems
The Paris Agreement introduced a bottom-up approach for addressing climate change by enabling countries to pledge individual commitments through nationally determined contributions (NDCs). Furthermore, Article 6 of the Paris Agreement recognizes th...
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| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/128121575306092470/Summary-Report-Simulation-on-Connecting-Climate-Market-Systems http://hdl.handle.net/10986/32747 |
| Summary: | The Paris Agreement introduced a
bottom-up approach for addressing climate change by enabling
countries to pledge individual commitments through
nationally determined contributions (NDCs). Furthermore,
Article 6 of the Paris Agreement recognizes that Parties may
engage in bilateral cooperative approaches, including
through the use of internationally transferred mitigation
outcomes (ITMOs), to achieve their NDCs. Heterogeneous
climate markets may have different governance systems and
technological approaches. Information about mitigation
outcomes (MOs) or emission reductions is currently collected
in a variety of repositories, including spreadsheets and
registries, with different levels of information. The
differences in these processes may constrain market
integration and add to the complexity of tracking and
recording transactions. Against this backdrop, there is a
need to create a new architecture to support transparency
and enhance the tradability of climate assets across
jurisdictions while ensuring the integrity of trades. The
Kyoto Protocol utilized an International Transaction Log
(ITL), operated by the United Nations Framework Convention
on Climate Change (UNFCCC), to facilitate communication
between registries and maintain a transaction log to ensure
accurate accounting and verification of transactions
proposed by connected registries. However, under the Paris
Agreement, which may rely on a decentralized approach to
markets under Article 6.2, climate negotiators are still
determining whether a centralized infrastructure should
continue, the functions it could perform, and to which
market mechanisms or transactions it would apply. Consistent
with the bottom-up ethos of the Paris Agreement, there is
value in demonstrating an approach to link registry systems
in a peer-to-peer arrangement. |
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