Carbon markets in transition

Bilateral agreements as basis towards piloting sectoral market mechanisms

Published: 26/05/2014

International climate protection projects to offset domestic reduction obligations have entered a critical stage. The current situation of the international carbon market is characterised by an activity gap between existing and future market-based mechanisms. However, a minimum activity level is required to maintain the expertise of various stakeholder groups and to test new mechanism approaches in practice.

Against this background, a research project funded by the German Emissions Trading Authority (DEHSt) and conducted by Ecofys assessed opportunities provided by bilateral agreements for piloting market-based approaches at sectoral levels. The research used a benchmarking approach to address the question of how reference levels in sectoral approaches can be designed to offer pathways from existing to new mechanisms.