Key Message

Market-based approaches can play a major role in providing the innovative solutions needed to help all countries meet their development goals in a manner that is economically and ecologically sustainable.

Video


The Kyoto Mechanisms: The Key to Combating Climate Change?
A Discussion featuring Dr. Jeffrey Sachs, Director of The Earth Institute at Columbia University and Yvo de Boer, Executive Secretary of the United Nations Framework Convention on Climate Change
(Flash Video - 2 hrs)

Markets, Mitigation and Climate Change

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Market-based approaches and an efficient and effective “carbon market” are expected to be key elements of future efforts to promote sustainable development. When imaginatively and carefully designed and implemented, market-based approaches can be an important component of an overall approach to mitigating greenhouse gas emissions, reversing serious ecosystem degradation, promoting sustainable livelihoods and reducing vulnerability to the impacts of climate change. Integrating the provision of ecosystem services (such as carbon reduction and sequestration, biodiversity conservation, watershed maintenance and sustainable forestry) into the marketplace could significantly reduce the costs and increase the feasibility of achieving deep, long-term emission reductions, provide incentives for the development and deployment of low-carbon energy technologies, promote technology transfer to less developed countries and achieve co-benefits through improved natural resource management practices.

The mosaic of international and domestic trading schemes related to the carbon market illustrates the potential of market-based approaches. The market mechanisms introduced under the Kyoto Protocol, for example, put a market value on greenhouse gas emission reductions and created new investment opportunities. However, for these market mechanisms to play a significant role in helping to achieve deep greenhouse gas emissions reductions, decision-makers need to consider how best to broaden and deepen the market's reach. The broader the reach of the carbon market—through greater participation of countries and coverage of key sources, sectors and companies—the more efficient and effective it will be.

Between 2002 and 2008, IISD explored how market-based approaches and effective carbon markets, such as those implemented through the Clean Development Mechanism, could be harnessed to support sustainable development and greenhouse gas reductions. IISD did this work primarily through two projects:

The institute continues to undertake work in this area through its Climate Change and Energy Program.

IISD has also gained direct experience in the operation of the carbon market through its internal mitigation strategy, which tracks, reduces and offsets greenhouse gas emissions generated through its daily operations.