Wild West Carbon Markets
The LCA is discussing the establishment of a new market mechanism (NMM) and a Framework for Various Approaches (FVA), including the use of markets. But well into the 1st week, it is still unclear what these two work programmes could be about.
There is a common view that the FVA is supposed to give recognition to national emission reduction systems and, if Parties want to, make the emission reductions units that are achieved by these systems internationally tradable and eligible for meeting national emission reduction targets (QELROs). Under the NMM on the other hand, countries could put forward national emission reduction systems to the UNFCCC to be approved for the issuance of credits. Both work streams could end up hosting the same types of emission reduction systems, ranging from market-based instruments to renewable feed-in tariffs. ECO is therefore wondering why bother with two different work streams?!
The answer is clear if one looks at the politics. Although the same types of emission reduction systems could be hosted, the NMM requires international common standards and UNFCCC approval before credits could be issued and used for compliance. The FVA on the other hand could allow countries to develop whatever systems they want and offer the resulting emission credits for compliance without the UNFCCC taking a close look at them, something strongly wished for by Japan, New Zealand and the US.
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