EXECUTIVE SUMMARY
This report discusses sectoral market mechanisms (SMMs) within the context of Nationally Appropriate Mitigation Actions (NAMAs) and their implications for international and domestic policy.
1. Introduction
The report aims to provide insights into the negotiation and domestic implementation of SMMs, focusing on the role of SMMs in NAMAs. It highlights the importance of aligning domestic policies with international negotiations to ensure effective and efficient climate change mitigation efforts.
2. Sectoral Market Mechanisms: Summarising Options
- New Market Mechanisms: The report explores new market mechanisms that could be introduced, including options for scaling up existing mechanisms.
- Clean Development Mechanism (CDM) and Other Kyoto Protocol Mechanisms: It examines the evolution of CDM and other Kyoto Protocol mechanisms, discussing potential improvements and adaptations.
- Domestic Policy Proposals: The report outlines various domestic policy proposals from different countries, such as restrictions on the quality of offsets in Australia, domestic and international offsets in Canada, and the use of Kyoto units in New Zealand.
3. Principles, Rules, and Requirements
- Possible Principles: The report suggests principles for establishing SMMs, emphasizing the need for transparency, fairness, and effectiveness.
- Possible Rules and Technical Requirements: It details the technical requirements needed for implementing SMMs, including institutional frameworks and operational guidelines.
- Institutional Requirements: The report highlights the importance of institutions beyond just market mechanisms, suggesting a comprehensive approach to governance and oversight.
4. Transition Issues and Domestic Implementation
- Transition Issues: The report addresses several transition issues, including:
- Transition from CDM to NAMAs/sectors, including incentives and scaling up.
- Interaction between existing CDM projects and SMMs.
- Transition from intensity-based SMMs to absolute targets and sectoral trading.
- Domestic Implementation: The report provides strategies for domestic implementation, including:
- Illustrating policy packages to reward performance at the entity level.
- Transitioning from sectoral crediting to trading.
- Balancing incentives and policy instruments.
5. Areas for Future Work
The report concludes with recommendations for future research and policy development, emphasizing the need for continued collaboration and innovation in addressing climate change through SMMs.
Glossary
A glossary of terms used in the report is provided for clarity.
References
References to relevant literature and data sources are included for further reading.
Figures
Several figures illustrate key points, including:
- Figure 1: An illustrative profile of emissions and credits.
- Figure 2: No crediting of CDM projects after the start of SMM.
- Figure 3: CDM offsets credited, with adjustments to the SMM baseline.
- Figure 4: CDM offsets fully credited and deducted from SMM overall credits.
- Figure 5: CDM offsets fully credited, carved out of the SMM.
- Figure 6: Transitioning from intensity-based SMM to absolute targets.
