Putting a price on carbon can be an indispensable part of a country's strategy to reduce emissions in an efficient way. Furthermore, putting a price on carbon through international carbon markets can also offer significant cost benefits and enable flexibility in achieving emission reduction targets. Article 6 of the Paris Agreement provides a potential basis for bottom-up carbon market linkage. Under the Paris Agreement, carbon pricing policies and international carbon markets are increasingly developed bottom up and are diverse in nature to accommodate countries' domestic priorities. While this bottom-up development promotes innovation, the diversity of approaches reduces transparency between climate actions and increases the complexity of market integration. A standardized framework is needed to assess countries' capacity building needs to participate in carbon pricing and international carbon markets. The World Bank initiated the development of the mitigation action assessment protocol (MAAP) in 2015 to drive meaningful assessment of diverse climate actions. Pilots results showed that MAAP provides a transparent and relatively easy-to-use framework to help countries identify strengths and opportunities for improvement. Future implementation of the tool will seek to address identified challenges such as collecting evidence, identifying capacity building priorities, and providing guidance on communication strategies. This report summarizes key findings and lessons learned from pilots.

This publication outlines the rationale for and benefits of piloting activities for Article 6 of the Paris Agreement. It emphasizes the need for testing alternate approaches and sharing of experiences. Article 6 provides for voluntary international cooperation that may facilitate the use of market-based approaches to help countries achieve their nationally determined contributions and enable greater gains. Pilot activities in developing member countries of the Asian Development Bank can help Asia and the Pacific develop capacity, readiness, and awareness on using Article 6 and participating in international carbon markets.

This Mitigation Action As ...

The Clean Development Mechanism (CDM), a framework created by the Kyoto Protocol, was an attempt to link the carbon market and sustainable development objectives in developing countries. Consequently, sequestered carbon is now a globally traded commodity with a huge potential to provide economic returns to land manager. Unlike traditional development models based on deferred and diffused benefit streams, the new carbon-market model offers an opportunity to directly link land management and natural resource conservation with specific and immediate market incentives. Analysis shows that carbon markets can serve a catalytic function in stimulating increased tree planting and improved forest management, thus helping to realize the multiple benefits of forestry and agro-forestry systems. In recent years opportunities for participation in carbon credit trading markets have been growing. The Chicago Climate Exchange (CCX) now boasts more than six million trades per month. A recent summary of the "State and Trends of the Carbon Market 2006" prepared for the World Bank's BioCarbon Fund, reports a rapid increase in corporate participation in the carbon market. This book focuses on the concept of CDM and other forestry based Carbon finance mechanisms introduced by UNFCCC and its impact on carbon markets. It also presents a brief analysis of the growth of carbon market in India, its present status and prospects in future. It provides a detailed account of Afforestation and Reforestation CDM Projects including the A/R Project Designed Document by UNFCCC in a simplified yet compact manner for better understanding of the procedure as a reference guide.

The Paris Agreement, with its universal requirement on all countries to submit nationally determined contributions (NDCs), marks a significant change for the framework of international cooperation through carbon markets. With all countries committing themselves to climate action to reduce emissions and achieve their NDCs, the ability to exert exclusive claims over the emission impact from carbon market investments and count them towards emission targets is becoming increasingly complicated. This study seeks to understand perspectives of potential host countries on the role international voluntary carbon markets might play in the context of their NDCs and the Paris Agreement. In doing so, it explores emerging issues and challenges these markets may face and clarifies key aspects host country governments may need to consider in relation to their market participation. The study takes voluntary carbon markets to refer to carbon market transactions that are undertaken by entities on a voluntary basis and not as a result of any policy-related regulatory requirements. Recent years have already seen traditional distinctions between voluntary and regulatory markets break down as standards bodies and the push for environmental and social co-benefits begin to cross the old boundaries. And increasingly, companies are adopting net-zero emission targets, which has been accompanied by a surge of interest and investment in the voluntary carbon market. Indications are that voluntary action and voluntary demand for credits is on an upward trajectory and expected to witness substantial growth in the coming years. A greater understanding of host countries' roles in international voluntary carbon markets, aligned with the Paris Agreement, will help to build on this momentum.

Currently, about 46 national jurisdictions and 35 cities, states, and regions, representing almost a quarter of global greenhouse gas (GHG) emissions, are putting a price on carbon as a central component of their efforts to reduce emissions and place their growth trajectory on a more sustainable footing. An increasing number of these jurisdictions are approaching carbon pricing through the design and implementation of Emissions Trading Systems (ETS). As of 2021, ETSs were operating across four continents in 38 countries, 18 states or provinces, and six cities covering over 40 percent of global gross domestic product (GDP), and additional systems are under development. This handbook sets out a 10-step process for designing and implementing an ETS. These steps are interdependent, and the choices made at each step will have important repercussions for decisions in the other steps. In practice the process of ETS design will be iterative rather than linear. The need to adjust and adapt policies over time is reflected in the update of this handbook, which was first released in 2016. New insights, approaches, and designs have proliferated adjusting the way ETSs operate and further developing our understanding of them.