From the Paris Agreement to a Low-Carbon Bretton Woods : Rationale for the Establishment of a Mitigation Alliance

This book investigates the existing and possible links between the concept of a Carbon Club and the Paris Agreement. In doing so the book defines those criteria that may lead to an effective establishment of a Carbon Club acting within the mandate of the Paris Agreement and identifies the key questions that such an option may help to tackle: * Which low-carbon pathways are compatible with the new temperature targets set by the Paris Agreement? * Can new entities like the Carbon Club have a decisive role in guaranteeing the alignment of the aggregate mitigating actions with the global objectives identified within the Paris Agreement? * What role will be played by market and non-market approaches within the proposed framework? * How can economic, social, and environmental sustainability be ensured during the implementation of the Agreement? * How can justice and equity be encouraged between the Parties and all the involved actors as required by the Agreement? * Which instruments can be designed and adopted to provide the expected degree of transparency for the new system? To respond to these questions the book adopts a holistic approach, able to emphasize the strong interrelations. The book discusses the opportunity to develop a Carbon Club within the Article 6 framework, and provides a feasible roadmap for its means of implementation, rules and governance structure. The final result is a feasible policy proposal that takes into account all the key issues introduced by the questions, and draws a roadmap towards a 'low-carbon Bretton Woods’. Dedication 5 Foreword 7 Acknowledgements 11 Collaborator and Co-Author 13 Collaborators 14 Contents 16 Editor and Main Author 20 Chapter 1: Introduction 21 1.1 Why Can Market Mechanisms Enhance Mitigation Ambition? 21 1.2 The Paris Agreement 22 1.3 Climate Clubs and Where They Can Make a Difference 22 1.4 A ‘Mitigation Alliance’ as Special Form of a Climate Club 23 1.5 How to Define the Common Mitigation Target 23 1.6 Learning from the Clean Development Mechanism 23 1.7 Kinds of Transactions 24 1.8 Governing the Market 24 1.9 How Carbon Prices Are to Be Generated 25 1.10 Co-benefits of Mitigation 25 1.11 Mobilizing a Transformational Club 25 References 25 Part I: Foundation of the Mitigation Alliance 27 Chapter 2: The Road to Paris 28 2.1 Introduction 28 2.2 A Brief History of Climate Change Negotiations 29 2.3 The Multi-annual Battle Culminating in the Paris Agreement 34 2.4 The Paris Agreement 42 2.5 Conclusions: Towards an Experimental Climate Governance 45 References 46 Chapter 3: Climate Clubs and Their Relevance Within the Paris Agreement 50 3.1 Introduction 50 3.2 The Climate Clubs: Typologies and Interpretations 52 3.3 Rationale and Objectives of Transformational Clubs 53 3.4 Structure and Functioning of Transformational Clubs 55 3.5 Models to Enforce the Club’s Objectives 58 3.6 Transformational Clubs and the Paris Agreement Regime 61 3.7 Conclusions: Towards a Mitigation Alliance 63 References 64 Chapter 4: Article 6 of the Paris Agreement as Foundation for the Mitigation Alliance 67 4.1 Introduction 67 4.2 Unveiling Article 6 69 4.3 Analysing the Terminology of Article 6 74 4.4 A Transformational Club Under Article 6 of the Paris Agreement: The Mitigation Alliance 79 4.5 Conclusions: Drafting the Architecture of the Mitigation Alliance 82 References 83 Part II: Architecture of the Mitigation Alliance 85 Chapter 5: The Mitigation Alliance Target and Its Distribution 86 5.1 Introduction 86 5.2 Adoption of an Aggregate Target in Line with the Paris Agreement Objectives 89 5.3 CBDR-RC Burden Sharing Within the Mitigation Alliance 92 5.4 Conclusions: Significance of a Mitigation Demand in Line with the Paris Agreement Objectives 98 References 99 Chapter 6: A Single Mechanism for the Certification of Mitigation Outcomes 102 6.1 Introduction 102 6.2 Ties Between the Clean Development Mechanism and Article 6 104 6.3 Introducing the Mitigation Alliance Mechanism 107 6.4 The Mitigation Alliance Mechanism as an Evolution of the Clean Development Mechanism 112 6.5 Overcoming the Limitations of the Clean Development Mechanism 116 6.6 Conclusions: The Mitigation Alliance Mechanism as Pillar of the Mitigation Alliance Supply System 119 References 120 Chapter 7: Approaches to the Exchange of Mitigation Outcomes 125 7.1 Introduction 125 7.2 Towards a Mitigation Alliance Carbon Market 127 7.3 Interpretation and Use of Offsetting 130 7.4 The Mitigation Alliance Facilitating Convergence Towards a Single Market 133 7.5 Approaches to the Certified Mitigation Outcomes Exchange 136 7.6 Role of Non-certified Mitigation Outcomes 143 7.7 Conclusions: Converging the Multiplicity 144 References 145 Chapter 8: A Hybrid Model to Govern the Mitigation Alliance 149 8.1 Introduction 149 8.2 Interactions Between the Mitigation Alliance and the International Climate Regime 151 8.3 Interactions Between the Mitigation Alliance and Other International Institutions 156 8.4 The Mitigation Alliance Structure 160 8.5 The Structure of the MA Governing Authorities 165 8.6 The Mitigation Alliance Target Fund 166 8.7 The Certified Mitigation Outcome Bank 169 8.8 The Certified Mitigation Outcome Exchange Board 170 8.9 Governing the Demand for Mitigation Outcomes 172 8.10 Governing the Supply of Mitigation Outcomes 174 8.11 Governing the Exchange of Mitigation Outcomes 176 8.12 Conclusions: A New Climate Architecture 183 References 183 Part III: Effects of the Mitigation Alliance 188 Chapter 9: The Carbon Pricing and the Establishment of a Low Carbon Bretton Woods 189 9.1 Introduction 189 9.2 Privatising Carbon as a Consequence of the Founding of the Mitigation Alliance 191 9.3 Carbon Pricing in Light of the Paris Agreement and of the Mitigation Alliance 193 9.4 The Low Carbon Bretton Woods 198 9.5 Conclusions: A Low Carbon Bretton Woods to Boost the Mitigation Alliance Benefits 200 References 200 Chapter 10: Excludable Benefits Resulting from the Mitigation Alliance 203 10.1 Introduction 203 10.2 The Co-evolution of Policies and Investments Induced by the Mitigation Alliance 205 10.3 Benefits Resulting from the Demand for CMO Production 206 10.4 Insights on the Potential Impact of the Mitigation Alliance 209 10.5 Conclusions: Transformational Potential of the Mitigation Alliance 212 References 212 Chapter 11: Uncertainties, Risks and Limits 216 11.1 Introduction 216 11.2 Uncertainties Affecting the Mitigation Alliance Proposal 217 11.3 Risks Resulting from the Mitigation Alliance Proposal 219 11.4 Limits of the Mitigation Alliance Proposal 221 References 222 Chapter 12: Conclusions 223 12.1 Key Findings 223 12.2 Policy Recommendations 225 12.3 Conclusions 228 References 229 A Low Carbon Bretton Woods: A Legal Critique 231 Context 231 Introduction 232 The MA Proposal 233 The Governance Framework to Support the MA Proposal 235 Conceptual Leap 237 Critical Mass 238 The World Bank’s MV Concept 240 The Complexity of Establishing the Governance and Legislative Framework 241 Conclusion 243 Glossary of Terms and Abbreviations 244 Front Matter....Pages i-xxiii Introduction....Pages 1-6 Front Matter....Pages 7-7 The Road to Paris....Pages 9-30 Climate Clubs and Their Relevance Within the Paris Agreement....Pages 31-47 Article 6 of the Paris Agreement as Foundation for the Mitigation Alliance....Pages 49-66 Front Matter....Pages 67-67 The Mitigation Alliance Target and Its Distribution....Pages 69-84 A Single Mechanism for the Certification of Mitigation Outcomes....Pages 85-107 Approaches to the Exchange of Mitigation Outcomes....Pages 109-132 A Hybrid Model to Govern the Mitigation Alliance....Pages 133-171 Front Matter....Pages 173-173 The Carbon Pricing and the Establishment of a Low Carbon Bretton Woods....Pages 175-188 Excludable Benefits Resulting from the Mitigation Alliance....Pages 189-201 Uncertainties, Risks and Limits....Pages 203-209 Conclusions....Pages 211-218 Back Matter....Pages 219-239