Using the carbon market to support the transition?

Highlights :

Offsets are a mechanism for compensating (or offsetting) greenhouse gas emissions for developed countries, enabling them to comply with their reduction commitments under the Kyoto Protocol by investing in emissions reductions in developing countries.

The use of offsets by developed countries has led to confusion in international discussions regarding accounting methods for targets and the definition of new commitments. Although Copenhagen seemed to call into question the approach based on the international carbon market, the role of national markets has been strengthened. However, little information has been provided as regards to the reform of the CDM (Clean Development Mechanism) and the emergence of new sectoral mechanisms.

Developing the CDM at the sectoral level induces considerable challenges in terms of aligning supply (the success of sectoral emission reduction strategies in developing countries) and demand (strengthening developed country efforts). Different mechanisms are possible, generating new public-private interactions, with very different implications in the North and in the South for the scope and type of financial assistance provided, for the stakeholders who bear the costs of reductions, and for the nature of the political and economic instruments to be put in place in the South.

Although the CDM has stimulated projects by prompting a new North/South movement of stakeholders through training in innovative financial mechanisms, it has not initiated any real reorganisation of the different economic sectors in developing countries. Complementary financial instruments and the active involvement of public stakeholders from developing countries in the implementation of national strategies will be necessary.

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