Browsing by Subject "NDCs"

This thesis examines the effects of Internationally Transferred Mitigation Outcomes (ITMOs) trade –embedded in the market mechanisms of Article 6 of the Paris Agreement– in assisting countries to achieve their Nationally Determined Contributions (NDCs), incentivize increased mitigation ambition, and contribute to the long-term goals of the Paris Agreement. The study takes place within a context characterized by highly heterogeneous and non-Paris aligned NDCs, reflecting current global circumstances. The study employs a conceptual framework that integrates the Social Cost of Carbon (SCC), Marginal Abatement Cost (MAC) curves, and Marginal Benefit (MB) curves. This framework is used to analyze the impact of ITMO trading on the ambition of NDCs and the potential for global mitigation. The research reveals that the roles countries play in the ITMO market—whether as buyers or sellers—is significantly influenced by the varied nature of NDCs, each country’s unique domestic marginal abatement costs, and how their mitigation ambition aligns with the SCC. In addition, it was found that ITMO trading can potentially trigger additional mitigation and escalate target ambitions. However, the success of this mechanism heavily depends on certain conditions, restrictions, and alignment with Article 6 principles. For instance, allowing negative reoptimization could lead to countries manipulating their NDCs for short-term gain, thus undermining long-term climate goals. In contrast, scenarios permitting positive reoptimization and restricting trade to beyond-NDC targets can encourage higher ambition levels in line with the Paris Agreement goals. However, the study also highlighted significant challenges and limitations. The risk of overselling could undermine future mitigation efforts, and managing these complexities requires a thorough understanding of each country’s domestic mitigation context. Moreover, the varied nature of NDCs adds a layer of complexity to ITMO trading, necessitating a meticulous examination of each country’s future actions. The study recommends future research to devise methods for better aligning NDCs to facilitate more effective ITMO trading. This could involve an extensive exploration of potential safeguards for ITMO trade such as transfer limits, ambition coefficients, surplus targets, and taxes. Evaluating their effectiveness could offer valuable policy implications for ITMO trade regulation. Future studies should also delve into the uncertainties and dynamic intertemporal effects that impact ITMO trading, aspects not accounted for in the current conceptual framework. By broadening the focus to include imperfect markets and real-world uncertainties, we can strive towards more robust and effective climate policies.