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Building Blocks for Market Approaches
- André Aasrud1, Richard Baron1, Katia Karousakis2
- Author Affiliations
- 1: International Energy Agency, France
- 2: OECD, France
- 01 nov 2010
- Bibliographic information
The three main categories of market readiness building blocks covered in the paper are: i) technical readiness, including coverage of emitters, monitoring and verification and establishing registries; ii) policy readiness, including setting clear goals, choosing appropriate instruments and distributing benefits; and iii) institutional and legal readiness, including establishing responsibility for collection of emissions data, issuance of allowance and credits, and handling legal compliance issues. Whilst some of these elements of readiness will be developed in parallel, the paper suggests a phased approach beginning with assessing mitigation potential and feasibility studies of different policy instruments, then establishing the technical framework before the necessary legal and institutional framework, and finally entering a piloting phase with a critical review process. The establishment of existing market mechanisms such as the EU ETS and the CDM provide some lessons on the capacity building challenges encountered in developing market tools, and the time it took to overcome these. However, with the prospects of a more bottom-up and fragmented carbon market post-2012, efforts to harmonise and develop international minimum requirements for some of the market readiness building blocks such as MRV and transaction registries may be required. Such harmonisation efforts would facilitate market access and integration, as well as the development of an international post-2012 accounting framework.
- mitigation potential, greenhouse gas, policy instrument, low-carbon development, market-based mechanisms, climate change, finance
- Classification JEL:
- F53: International Economics / International Relations, National Security, and International Political Economy / International Agreements and Observance; International Organizations
- Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming
- Q56: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Government Policy