Global Carbon Mechanisms: Emerging lessons and implications (CTC748)

The global carbon mechanisms have succeeded in channelling billions of Euros towards low-carbon investments in developing countries, but cannot deliver what is needed in the future without support including reforms and involvement of North America.

The publication shows that the Clean Development Mechanism itself has triggered more than 4000 emission-reducing projects in developing countries and is likely to save up to 2 billion tonnes of emissions reductions by 2012. Other Mechanisms under the Kyoto Protocol, including emerging Green Investment Schemes, show great promise. But many of the gains are at peril, warns the publication, unless governments act to restore balance in the markets and learn the emerging lessons.

The publication identifies and analyses three fundamental problems that must be tackled.

1. An excess of supply over demand will mean low prices in the market without government action
2. There must be reforms to improve the efficiency and environmental performance of the existing mechanisms
3. The Global Carbon Mechanisms are and will continue to be a central pillar in the global response to climate change to 2020, but are not on their own sufficient. They need to be complemented by other action to support the required cuts in carbon emissions

Technical annexes:
Global Carbon Mechanisms Annex I: Analysis of CDM project performance (pdf, 133kb)
Global Carbon Mechanisms Annex II: Emissions and demand projections to 2020 (pdf, 424kb)

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Note that the publication does not directly discuss the EU Emissions Trading Scheme. That scheme has been discussed in other recent Carbon Trust publications.

Related publications:
Global Carbon Mechanisms: Emerging lessons and implications - Executive summary (CTC747)
Tackling carbon leakage - Sector-specific solutions for a world of unequal prices (CTC767)
Cutting Carbon in Europe: The 2020 plans and the future of the EU ETS (CTC734)
EU ETS impacts on profitability and trade: a sector by sector analysis (CTC728)
EU ETS Phase II allocation: implications and lessons (CTC715)
Allocation and competitiveness in the EU Emissions Trading System: Options for Phase II and beyond (CTC609)
The European Emissions Trading Scheme: Implications for Industrial Competitiveness (CT-2004-04)