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BRIEF

Networked Carbon Markets


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Photo credit: NASA's Marshall Space Flight Center


Background and Objectives

The Paris Agreement signals a shift towards a bottom-up approach where climate activities, as reflected in their Nationally Determined Contributions (NDCs), are driven by national reality, economic growth and political priorities. While enabling broad participation, the World Bank recognizes that far more financing is required to help countries implement their NDCs and ultimately reach the global 1.5 – 2C goal. The World Bank Group (WBG) believes that the use of markets will have an important role to play in the successful, cost-effective implementation of the Paris Agreement by reducing costs and facilitating greater resource mobilization. WBG also recognizes that the Paris Agreement gives climate markets a much needed, renewed basis for support by enabling Parties to voluntarily cooperate in achieving their NDCs through Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6. However, it also notes that the definition and required architecture for post-2020 markets are largely left to future negotiations.

Against this backdrop, the World Bank’s Carbon Markets and Innovation Practice has set as its principal mandate the facilitation of its client countries in exploring the specific role of markets under Paris, and helping decision makers develop and pilot the architecture that may be required to generate, issue and transfer MOs internationally.  Towards this mandate, the CMI supports countries that are interested in international climate markets through programs such as the Carbon Pricing Leadership Coalition (CPLC), the Partnership for Market Readiness (PMR) and the Networked Carbon Markets (NCM) initiative, to provide the relevant investment, advocacy, advisory, and knowledge services.

Specifically, the NCM initiative is working with Governments, the private sector, academia and civil society to develop and pilot innovative tools, services and institutions that could support bottom-up, linked international climate markets. The end-goal is to enhance the transparency, comparability and potential fungibility of heterogeneous climate actions to enable more countries to participate in liquid and scalable international climate markets, while still preserving the environmental integrity of the trade. Furthermore, it is envisioned that the mechanisms developed by the initiative would have multi-purpose, stand-alone benefits, in addition to supporting linkage. For instance, comparing the MOs of actions through a common, robust and transparent assessment framework could enable benchmarking of climate mitigation programs, policies and commitments; guide financing and capacity building priorities; track and monitor progress towards NDC implementation; and incentivize greater ambition through a race-to-the-top. 

The NCM initiative’s activities are divided into four key work-streams, as summarized in the Figure 1. Key documents for these four work-streams are provided in the “Related Documents” section below.

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Figure 1. The NCM initiative’s key work-streams


Related Documents

Overview

The NCM initiative's Partners & Strategy Workshop 2017 - Summary Note

The NCM initiative's Partners & Strategy Workshop 2017 - Combined Presentations Slides

The NCM initiative’s Partners & Strategy Workshop 2016 – Summary Note

The NCM Initiative’s Partners & Strategy Workshop 2016 – Combined Presentation Slides

 

Concept Development

"Views on Mitigation Value and its Application” (May 2017) by Andrei Marcu

"Carbon Market Clubs and the New Paris Regime" (July 2016) by Climate Strategies

"Networking Carbon Markets – Key Elements of the Process" (July 2016) by Justin Macinante 

The Regulatory Framework to Support Carbon Market Linkage--A Concept Paper (April 2016) by Reed Smith

"The Regulatory Framework to Support Carbon Market Linkage – A Concept Paper” (April 2016) by Reed Smith (Chinese Version)

"Mitigation Value, Networked Carbon Markets, and the Paris Climate Change Agreement" (January 2016) by Andrei Marcu

"Evaluating Mitigation Effort" (November 2015) by Harvard, IETA, the World Bank Group and the Enel Foundation

"Networked Carbon Markets – Key Elements of the Mitigation Value Assessment Process" (October 2015) by Justin Macinante

 

Mitigation Action Assessment Protocol (MAAP)

Concept Note: the MAAP Ambassador Program in Latin America (Oct 2017)  

Concept note: Joint capacity building through the Climate Action Impact Tool and the MAAP online interface

MAAP online interface step-by-step guide (July 2017)

MAAP online interface how-to video (May 2017)

The MAAP Partners & Strategy Roundtable 2017 – Summary Note

MAAP Report (April 2016)

 

Modelling and Data Assessments

"Financing the transition from brown to green" (Dec 2017) by Climate Transparency

"G20 Brown to Green Report 2017" (July 2017) by Climate Transparency

"G20 Brown to Green Report 2017 Country Profiles" (July 2017) by Climate Transparency

Video: Co-chairs of Climate Transparency on the collaboration with the World Bank (July 2017) by Climate Transparency

"G20 Brown to Green Report 2016" (September 2016) by Climate Transparency

"G20 Brown to Green Report 2015" (December 2015) by Climate Transparency

 

Market Infrastructures 

Presentation slides: Registries and blockchain for the next generation of carbon markets (Sep 2017)

"Networked Carbon Markets: Permissionless Innovation with Distributed Ledgers?" (Jul 2017) by the University of Edinburgh  

"A Conceptual Model for Networking of Carbon Markets on Distributed Ledger Technology Architecture" (April 2017) by the University of Edinburgh  

"International Carbon Asset Reserve – Prototyping For Instruments Reducing Risks and Linking Carbon Markets" (April 2016) by Grantham Research Institute and INFRAS Consulting Group

"Design Options for an International Carbon Asset Reserve" (July 2015) by INFRAS Consulting Group

 

Outreach Events and Documents

Blog (22 Dec 2017): Supporting global climate efforts through online, independent assessment frameworks

Blog (2 Dec 2016): Making the links between carbon markets in a post-Paris world

Blog (28 Jan 2015): Networking climate actions for stronger, international carbon markets

Innovate4Climate side event on "Launch of the MAAP Online Interface" (23 May 2017) – Combined Presentation Slides

Asia Pacific Carbon Forum side event on "Supporting capacity building and financing decisions through MAAP" (14 Dec 2017) – Combined Presentation slides

The LEDS LAC side event on "Supporting the development of robust and comparable mitigation actions through MAAP" – Combined Presentation Slides

WBG and Governmant of Switzerland joint event on "Transparency and Linking in a New Paris Regime” (9 Mar 2016) – Agenda

WBG and Government of Switzerland joint event on "Transparency and Linking in a New Paris Regime" – (9 Mar 2016) Session 1 Combined Presentation Slides

WBG and Government of Switzerland joint event on "Transparency and Linking in a New Paris Regime" (9 Mar 2016) – Session 2a Combined Presentation Slides

WBG and Government of Switzerland joint event on "Transparency and Linking in a New Paris Regime" (9 Mar 2016) – Session 2b Combined Presentation Slides

WBG and Government of Switzerland joint event on "Transparency and Linking in a New Paris Regime" (9 Mar 2016) –Session 3a Combined Presentation Slides

WBG and Government of Switzerland joint event on "Transparency and Linking in a New Paris Regime” (9 Mar 2016) –  Session 3b Combined Presentation Slides