BRIEF

Networked Carbon Markets


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Photo credit: NASA's Marshall Space Flight Center


Background and Objectives

The World Bank Group (WBG) believes that linking and other forms of international cooperation will have an important role to play in the successful, cost-effective implementation of the Paris Agreement. In contrast to the Kyoto Protocol, Article 6 of the Paris Agreement allows countries to transfer mitigation outcomes from any mechanism, measure or protocol. By potentially expanding substantially both the geographic scope of linking opportunities and the instruments which may be linked, the Paris Agreement could open the door for operationalizing the next generation of climate markets, and support the achievement of the global ambition promised in the Agreement.

Against this backdrop, the Carbon Markets and Innovation (CMI) Practice has set as its principle mandate to explore the specific role of climate markets under Paris, and develop and pilot the required architecture to facilitate the generation and transfer of mitigation outcomes.  Towards this mandate, the CMI is leveraging programs such as the Carbon Pricing Leadership Coalition (CPLC), the Partnership for Market Readiness (PMR) and the Networked Carbon Markets (NCM) initiative, to provide advocacy, advisory and knowledge services needed to operationalize cooperative, bottom-up approaches envisaged in the Paris Agreement.

Specifically, the NCM initiative is working with Governments, private sector, academia and civil society to develop the tools, services and institutions needed for linked international climate markets that accommodate a "patchwork" of different domestic climate actions. The end-goal is to enhance the transparency and comparability of heterogeneous climate actions in order 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 mitigation outcomes 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. 

 

Highlights of Fiscal Year 2017

NCM Concept Development

Pertaining to services, market infrastructures and institutional frameworks required for NCM

  • Partner with CPLC to develop the METRIC Guidelines  in order to make the case for expanding the range of approaches to climate market linkages under the Paris Agreement
  • Work with teams across WBG, including IFC and Global Practices, to progress WBG’s Strategy for operationalizing Article 6

Country Engagement & Pilots

Application of tools, services and institutions, as well as outreach in the form of consultations and workshops

  • Apply the MAAP to more than 140 programs globally to enable “finance-ready” and “market-ready” mitigation actions
  • Build India’s technical readiness to link “market-ready” mitigation actions to regional and international climate markets through analytical work 

Modelling & Data Assessments 

Refine methodologies for the generation and issuance of mitigation outcomes. Model and simulate different linking scenarios

  • Provide financial and technical contribution to the Climate Transparency consortium to progress the composite mitigation index
  • Share lessons learned and collaborate with the Initiative for Climate Action Transparency (ICAT) and Gold Standard to refine and develop assessment methodologies for the generation and issuance of mitigation outcomes
  • Finalize the preliminary modelling study to estimate the financial and mitigation implications of linking China, Mexico and South Korea’s cap-and-trade systems

Market Infrastructures

Modernize infrastructures to facilitate more efficient and secure data collection processes and market transactions

  • Partner with PMR to conduct feasibility studies on the application of emerging technologies such as Blockchain to modernize registry functions for climate markets and linkage.
  • Develop the MAAP online interface to generate and manage up-to-date MAAP scores, and increase access to datasets generated by the MAAP for benchmarking and comparison

Related Documents

Overview of Networked Carbon Markets

The Networked Carbon Markets initiative's Partners & Strategy Workshop 2017 - Summary Note

The Networked Carbon Markets initiative's Partners & Strategy Workshop 2017 - Combined Presentations Slides

The Networked Carbon Markets Initiative Pitchbook

The Networked Carbon Markets initiative Work Plan for 2016

The Networked Carbon Markets initiative’s Partners & Strategy Workshop 2016 – Summary Note

The Networked Carbon Markets Initiative’s Partners & Strategy Workshop 2016 – Combined Presentation Slides

BBL: Opportunities for Linking China’s Emission Trading Scheme in a New Paris Regime – Combined Presentation Slides

Overview of Networked Carbon Markets

Transparency and Linking in a New Paris Regime – Agenda

Transparency and Linking in a New Paris Regime – Session 1 Combined Presentation Slides

Transparency and Linking in a New Paris Regime – Session 2a Combined Presentation Slides

Transparency and Linking in a New Paris Regime – Session 2b Combined Presentation Slides

Transparency and Linking in a New Paris Regime – Session 3a Combined Presentation Slides

Transparency and Linking in a New Paris Regime – Session 3b Combined Presentation Slides

Mini-Seminar on Networked Carbon Markets – Presentations 

CMIA - NCM Roadshow - Sydney

CMIA - NCM Roadshow - Washington, DC

CMIA - NCM Roadshow - London

IETA-Harvard-World Bank Group Workshop Summary

Blog: Networking climate actions for stronger, international carbon markets

Globally Networked Carbon Markets Working Group 2nd Meeting

Globally Networked Carbon Markets Working Group 1st Meeting

 

Concept Development

“Carbon Market Clubs and the New Paris Regime” by Climate Strategies

Networking Carbon Markets – Key Elements of the Process

The Regulatory Framework to Support Carbon Market Linkage--A Concept Paper

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

"Evaluating Mitigation Effort" by Harvard, IETA, the World Bank Group and the Enel Foundation

Networked Carbon Markets – Key Elements of the Mitigation Value Assessment Process

Mitigation Value, Networked Carbon Markets, and the Paris Climate Change Agreement

 

Mitigation Action Assessment Protocol

The Mitigation Action Assessment Protocol Partners & Strategy Roundtable 2017 – Summary Note

The LEDS LAC side event on “Supporting the development of robust and comparable mitigation actions through the Mitigation Action Assessment protocol” – Combined Presentation Slides

The LEDS LAC side event on “Supporting the development of robust and comparable mitigation actions through the Mitigation Action Assessment protocol” – Agenda

PBL: Monitoring Climate Targets in the Netherlands

SEI: Toward a Framework for 'Ambition Index' and Online Calculator

Rating Environmental Integrity and Mitigation Value of Carbon Assets: The Case of NAMAs

Mitigation Action Assessment Protocol

Launch of the MAAP Online Interface – Presentation Slides

 

Climate Transparency

G20 Brown to Green Report 2017

G20 Brown to Green Report - Country profiles 2017

Video: Co-chairs of Climate Transparency on the collaboration with the World Bank

 

Market Infrastructures 

International Carbon Asset Reserve – Prototyping For Instruments Reducing Risks and Linking Carbon Markets” by Grantham Research Institute and INFRAS Consulting Group

Design Options for an International Carbon Asset Reserve by INFRAS Consulting Group

LSE: Networked Carbon Markets: Assessment of Mechanisms

A Conceptual Model for Networking of Carbon Markets on Distributed Ledger Technology Architecture