Parties Envisage Greater Use of Mechanisms

A new research paper examines how parties position themselves on market mechanisms in the latest Nationally Determined Contributions (NDCs). After the adoption of the Paris Climate Agreement in 2015, parties were required to prepare new or updated NDCs and submit them to the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat by 2020. The new JIKO Policy Paper 01/2021 "Implementing Paris Cooperatively" by Victoria Brandemann, Nicolas Kreibich and Wolfgang Obergassel (Research Unit Global Climate Governance, Wuppertal Institute) surveys text passages regarding international cooperation under Article 6 in the 51 NDCs that were submitted until by the end of February 2021.

Most parties are open to using market mechanisms in the future. The paper also compares the positions on market mechanisms in the new or recently updated NDCs with the positions in the previous NDCs of the same 51 parties. The comparison shows that market mechanisms now have a stronger resonance. Of the 51 NDCs analysed, 20 express a stronger interest in market mechanisms compared to the previous NDCs. Another aspect explored is whether parties intend to become sellers or buyers of mitigation outcomes. In addition, the first part of the paper looks at the pilot activities of parties and how this engagement relates to the parties' position towards carbon markets in their NDCs.

The authors note that despite positive trends, major progress in the NDCs on market mechanisms was not to be expected. The statements on market mechanisms are very vague and overall do not suggest that there is an increased role for international market mechanisms in climate change mitigation. However, the 51 NDCs analysed correspond to only about 40 per cent of the parties to the Paris Agreement, so that the analysis can only be regarded as an interim assessment. An updated version of the paper will be published at a later stage, which will include the remaining NDCs that have not yet been submitted.

The JIKO Policy Paper 01/2021 "Implementing Paris Cooperatively" is available free of charge via the link below.