New Opportunities and Challenges for Carbon Markets Phase II

Carbon markets not only foster cost-effective mitigation, they are also envisaged to play an important role in raising the ambitions of Nationally Determined Contributions (NDCs) in the context of the Paris Agreement and promoting climate-friendly investment. Through the Federal Ministry for Environment, Nature Conservation, Building and Nuclear Safety (BMUB), Germany has for years been supporting its partner countries in the use of market mechanisms. Whereas in the past, this cooperation was mainly focused on Kyoto Protocol instruments, new areas of support include new market mechanisms that are being negotiated under Article 6 of the Paris Agreement, the interlinkages between market approaches and Nationally Appropriate Mitigation Actions (NAMAs), and results-based financing. Given the diversity of the countries’ NDCs, ensuring environmental integrity and applying robust accounting standards should lie at the core of the future market instruments.

To explore the new opportunities and challenges of carbon markets, adelphi, along with Perspectives, NewClimate Institute, Climate Focus and independent experts, supported the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in providing high-quality advisory services to the BMUB, which are delivered in the form of policy briefs, short technical papers, in-depth studies, and detailed technical analysis. Topics ranged from existing carbon pricing instruments, such as emissions trading systems, and international approaches like the Clean Development Mechanism and Joint Implementation on the future of market mechanisms under Article 6 of the Paris Agreement, and climate finance.