Germany’s international cooperation on carbon markets: Status and prospects in select partner countries

This report and the case studies will be presented at the COP23 side event "Are countries ready for Article 6?" on 7 November (10.00 - 11.30h | EU Pavilion, Bonn Zone).

Germany is very active in international cooperation to support market mechanism conceptualization, implementation and capacity building in various developing and emerging countries, and is also aiming to achieve international links between global markets and instruments such as trading and crediting approaches. The comprehensive cooperation inventory developed as part of the project "Analysing the interactions between new market mechanisms and emissions trading schemes" highlights the historically strong political anchoring of carbon market development in Germany’s international cooperation, and the intent to continue to be a proactive player.

With Article 6 of the Paris Agreement, a new framework for international cooperation, market links and transfers of mitigation outcomes was created. While rules for Article 6.2 and modalities and procedures for Article 6.4 are being negotiated, countries and experts are reflecting on how to best integrate previous experience with market based domestic and international policies. Depending on a country’s carbon market development stage, it may have different options to make use of the carbon market related mechanisms implied in Art. 6.2 and 6.4.

The case studies that emanate from the here presented analysis offer an in-depth analysis in three partner countries identified through the selection process in Section 2 of this paper. Each country’s explicit interest in participating in carbon market development in a post-Paris world and its capability to realise this interest have been specifically considered, so as to assess the readiness of countries to engage in Article 6. The case countries present a spectrum - from early to advanced - of carbon market development and can be expected to engage in different options for using markets under the Paris Agreement. 

Case studies and Quick Facts

• Germany‘s carbon market cooperation with Ethiopia: Prospects for engaging with Article 6 of the Paris Agreement

• Germany‘s carbon market cooperation with Ukraine: Prospects for engaging with Article 6 of the Paris Agreement

• Germany‘s carbon market cooperation with Viet Nam: Prospects for engaging with Article 6 of the Paris Agreement

• Quick Facts on Article 6 - Market Mechanisms