Market Mechanisms and the Paris Agreement

The Harvard Project on Climate Agreements has released a volume of seventeen briefs summarizing research on options for elaborating the Paris Agreement's Article 6, the evolution of market-based systems, and how these two processes might best support each other. The briefs are designed to be readily accessible — and, it is hoped, useful — to negotiators, policy makers, and other stakeholders, as they consider how to elaborate the Paris Agreement in order to realize its potential to effectively address global climate change.

Most authors were participants in a research workshop conducted by the Harvard Project on July 6, 2017, and the volume builds upon the discussions in that forum. Participants included twenty of the world's leading researchers focusing on market mechanisms and the Paris Agreement, coming from the disciplines of economics, political science, international relations, and law — and based in Europe, the Republic of Korea, and the United States. The agenda and list of participants for the workshop are available at the bottom of this page.

The first brief, by way of background, examines lessons learned from implementation of emissions trading systems (ETSs). The other briefs are organized in three sections. The first focuses on approaches to establishing international carbon price(s), crucial for developing broader multilateral carbon markets — especially in the context of the highly heterogeneous mitigation pledges characteristic of the Paris-Agreement regime. This section proceeds to consider the range of heterogeneity in national mitigation pledges with which market participants must deal. It concludes with a specific example of linkage with the aviation sector.

The second section provides detailed analysis of Article 6 and its potential elaboration pathways. The third section examines the development of China's national ETS and prospects for linkage in East Asia, again in the context of the Paris Agreement.

The July 2017 workshop and this volume build upon previous work by the Harvard Project on Climate Agreements — including a research workshop examining the elaboration and implementation of the Paris Agreement more broadly, held in July 2016, and a subsequent publication similar in format to the current volume.

The Harvard Project is grateful to the Harvard University Climate Change Solutions Fund for major support for both workshops and publications. The Harvard University Center for the Environment, the Enel Endowment for Environmental Economics at Harvard University, and BP also provided support.