There needs to be a decision adopting core rules for a global voluntary carbon market at the climate change convention in Doha at the end of this year, Cyprus and the European Commission have said.
“We recognise the urgent need to speed up the operationalisation of the new market mechanism and adopt modalities and procedures in Doha,” Cyprus said on behalf of the EU in a submission to the UN Framework Convention on Climate Change (UNFCCC).
It is imperative to ensure a net decrease of global greenhouse gas (GHG) emissions, Cyprus emphasised. “It is essential that the new market mechanism only credits emission reductions against ambitious crediting thresholds below business-as-usual emissions.” A primary condition for the successful implementation of the new market mechanism is that it should maintain environmental integrity and should not lead to “perverse incentives” for actions that negatively impact the environment, Cyprus added.
The modalities and procedures should include defining trading and crediting of the global market, participation requirements, rules on how to define sectors, methods and criteria for determining baselines, length of trading period, and provisions for monitoring, reporting and verification of emissions. The market could include broad segments of the economy, such as the energy sector, Cyprus said.
The decision in Doha should address substantive elements of the global carbon market to allow countries to prepare for its implementation right after the climate change talks. The need for further developments of rules and guidelines should not “impede a prompt start” of the new market mechanism, Cyprus said.
The global voluntary carbon market could also be an avenue to support nationally appropriate mitigation actions (Namas). A Nama by a developing country specifies a voluntary measure aimed at mitigating GHG emissions. The market could lead to the implementation of domestic policies to enable emission reductions, Cyprus added. The mechanism could also deliver finance and investment to fund domestic emission reductions.
The new market mechanism should build on lessons learned from existing mechanisms, Cyprus highlighted. The project-based design of the clean development mechanism (CDM) has a limited capacity to trigger large-scale structural changes, which is why the global voluntary carbon market needs to target broad segments of the economy to enhance emission reductions, Cyprus said.
“Moreover, experiences from the existing mechanisms suggest that when scaling up mitigation efforts to cover sectors or broad segments of the economy, the governance system should allow and require a more active role for the developing country,” Cyprus said. The developing country could put in place regulation to support the new market mechanism, Cyprus noted.