As part of the ELEEP Transatlantic Energy and Climate Dialogue, Ecologic Institute and Climate Strategies organized a UNFCCC Side Event entitled "Transatlantic Perspectives After Paris: Carbon Markets and the linking of Emission Trading Systems". The Bonn Climate Change Conference in May 2016 marked the beginning of the Paris Agreement’s implementation and comes at a time that discussions on carbon markets are gaining renewed prominence: - The Paris Agreement provides the framework for new mechanisms in its Article 6 and leaves room for interpretation in its implementation. - While facing legal challenges, Obama’s Clean Power Plan could enable US States to achieve GHG reduction targets with the support of carbon market mechanisms. - Within the EU Emission Trading System, options like the Market Stability Reserve are being explored to improve on the balance of allowances’ supply and demand. - Additional states and regions (ex. China) have started carbon markets in recent years and could provide powerful partners for the linking of Emission Trading Systems. In this context, our experts Aki Kachi and Michael Mehling discussed existing options for the development of carbon markets post-Paris and provided a perspective on what they could mean for carbon markets in the US and the EU. Our experts’ presentations were followed by a discussion, moderated by Matthias Duwe.

1. Transatlantic Perspectives After Paris:
Carbon Markets and the linking of Emissions Trading Systems
Aki Kachi, 23 May 2016, Bonn

2. Markets in the UNFCCC
Kyoto Protocol
International Emissions Trading (EIT)
Joint Implementation (JI)
Clean Development Mechanism (CDM)
UNFCCC
Framework for Various Approaches (FVA)
New Market Mechanism (NMM)
Non-Markets (NMA)
Paris Agreement
Cooperative Approaches (CA)
Mechanism to contrubute to the mitigation of greenhouse
gas emissions and support sustainable development (SDM)
(Framework for non-market approaches)

3. Article 6 Cooperation
• 6.1 Chapeau: Recognition that some Parties
choose to pursue voluntary cooperation in
the implementation of their NDCs to allow for
higher ambition in mitigation and adaptation
actions and to promote sustainable
development and environmental integrity

4. Art. 6.2-6.3 CA
• Voluntary cooperative approaches that
involve use of ITMOs towards NDCs
• Promote sustainable development
• Ensure environmental integrity and transparency
(incl. governance)
• Robust accounting to ensure: avoidance of double
counting consistent with guidance
 Possible direct link?

5. Art. 6.4-6.6 SDM
• Mechanism to contribute to the mitigation of
GHG and support sustainable development
(SDM)
• Voluntary
• Promote GHG mitigation; foster sustainable development
• Incentivize and facilitate participation by public and
private entities authorized by a Party
• Contribute to reduction of emission levels in host Party,
reductions can be used by another Party
• Overall mitigation
• Share of proceeds
 Possible indirect link through offsets?

6. Art. 6.8-6.9 NMA
• Framework for non-market approaches
• Integrated, holistic, balanced
• Assist in implementation of NDCs
• Sustainable development and poverty eradication
• Mitigation, adaptation, finance, technology
transfer and capacity building
• Opportunities for coordination across
instruments and institutional arrangements
• (International cooperation without transfers)
 Linking by degrees?

7. Carbon Market Watch on Linking
• Chapeau: “voluntary cooperation…to allow
for higher ambition”
• Safeguards for linking decisions
• Evaluation of fair share of climate ambition
• inclusion of aircraft operators
• exclusion of international offsets
• equivalent price and supply management
• robust allowance allocation
• Stronger role for European Parliament, more
transparency

8. Thank you for your attention!
Aki Kachi
International Policy Director
Carbon Market Watch
Rue d'Albanie 117, B-1060 Brussels, Belgium
Tel: +32 2 335 36 64 / Fax: +32 2 335 36 69 / Mobile: +32 483 1852 19
Email: aki.kachi@carbonmarketwatch.org
Web: www.carbonmarketwatch.org
Twitter: @carbonmrktwatch @akikachi

9. • Decision para. 37: SBSTA to recommend
guidance to ensure that double counting is
avoided on the basis of a corresponding
adjustment by Parties for both anthropogenic
emissions by sources and removals by sinks
covered by their nationally determined
contributions under the Agreement
• Decisions para. 39: SBSTA to develop and
recommend rules, modalities, and
procedures for NMM