Networked Carbon Markets
This paper considers the regulatory frameworkthat is required to be put in place in order to support theestablishment of carbon market linkages, in particular,in light of the bottom-up approach contemplated by theParis Agreement. Section two describes the key purpose ofthe paper and details the assumptions and other factorsthat are made in this paper concerning ‘networking’—aform of linking contemplated by the World Bank Group’s Networked Carbon Markets (NCM) initiative. The key assumption in the paper is that the parties seeking to link two or more carbon markets will, before considering theregulatory elements required for linking, have concluded that there must be political, administrative and/oreconomic rationale for linking. Section three considers the impact of the Paris Agreement, in particular Article 6, on carbon market linkage.Section four introduces the concepts of governance, legal and regulatory frameworks and seeks to draw a distinction between these three concepts, whilst recognising there is a degree of overlap.In section five discuss the regulatory framework that we consider to be necessary for carbon market linking when considered in the context of traditional linkage models (i.e., those that require greater homogeneity in order to establish linkages).In section six analyses a number of existing trading arrangements to assess whether they offer a suitable foundation for future linked carbon markets. This would potentially enable existing regulatory frameworks to be used as a means of jump-starting the linkage process.Section seven includes a more detailed discussion of the World Bank Group’s proposal for networking and the concept of mitigation value (MV) which is a fundamental element of networking. We consider the variety of modalities for linking, including the networking modeland the NCM transaction scenarios discussed in the NCM Concept Paper. This relates to the acceptance by one country of its MV assessment by a third party assessor. Although we highlight some of the new challenges this will throw up, we conclude that further development about how MV could be operationalised will be required before guidance on the regulatory frameworkfor networking can be further advanced.
| Main Authors: | , |
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| Format: | Report biblioteca |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016-04
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| Subjects: | CARBON POLICY, CARBON PRICING, PARIS AGREEMENT, GREENHOUSE GAS EMISSIONS, REGULATION, LEGAL FRAMEWORK, GOVERNANCE, CARBON MARKETS, CARBON CLUB, |
| Online Access: | http://documents.worldbank.org/curated/en/592101491569237251/Networked-carbon-markets-the-regulatory-framework-to-support-carban-market-linkage-a-concept-paper https://hdl.handle.net/10986/26430 |
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| Summary: | This paper considers the regulatory
frameworkthat is required to be put in place in order to
support theestablishment of carbon market linkages, in
particular,in light of the bottom-up approach contemplated
by theParis Agreement. Section two describes the key purpose
ofthe paper and details the assumptions and other
factorsthat are made in this paper concerning
‘networking’—aform of linking contemplated by the World Bank
Group’s Networked Carbon Markets (NCM) initiative. The key
assumption in the paper is that the parties seeking to link
two or more carbon markets will, before considering
theregulatory elements required for linking, have concluded
that there must be political, administrative and/oreconomic
rationale for linking. Section three considers the impact of
the Paris Agreement, in particular Article 6, on carbon
market linkage.Section four introduces the concepts of
governance, legal and regulatory frameworks and seeks to
draw a distinction between these three concepts, whilst
recognising there is a degree of overlap.In section five
discuss the regulatory framework that we consider to be
necessary for carbon market linking when considered in the
context of traditional linkage models (i.e., those that
require greater homogeneity in order to establish
linkages).In section six analyses a number of existing
trading arrangements to assess whether they offer a suitable
foundation for future linked carbon markets. This would
potentially enable existing regulatory frameworks to be used
as a means of jump-starting the linkage process.Section
seven includes a more detailed discussion of the World Bank
Group’s proposal for networking and the concept of
mitigation value (MV) which is a fundamental element of
networking. We consider the variety of modalities for
linking, including the networking modeland the NCM
transaction scenarios discussed in the NCM Concept Paper.
This relates to the acceptance by one country of its MV
assessment by a third party assessor. Although we highlight
some of the new challenges this will throw up, we conclude
that further development about how MV could be
operationalised will be required before guidance on the
regulatory frameworkfor networking can be further advanced. |
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