Collab: Martina Goldsztein. Lawyer, specialist in Environmental and Administrative Law. Assistant Professor at the University of Buenos Aires. Founder of Environmental & +.
To approach the theme "Climate Change and Carbon Market" I consider it essential to start by recalling some historical milestones that give origin to this.
In 1992 a highly anticipated event took place in Rio de Janeiro, Brazil: the Second "Earth Summit" (also we known as 'Rio 92'). In this context, and considering the world we inhabited at that time, the existence of Climate Change was recognized for the first time, along with the need to take measures to mitigate it and adapt rapidly.
Following this, and taking it as the first introductory step towards the Carbon Market, the "Kyoto Protocol" was adopted in 1997 (which is an Annex to Rio 92). It was considered the first international binding agreement for the reduction of Greenhouse Gas Emissions (compared to 1990 levels) and introduced several important market-based mechanisms, such as:
The "Clean Development Mechanism" (Article 12) encourages primarily industrialized countries to finance greenhouse gas emission reduction projects in exchange for 'Certified Emission Reductions' (CERs), which help them meet their own national obligations regarding greenhouse gas reduction and sustainable development.
The emergence of an "International Emissions Trading" system facilitates emission reductions through cooperation between countries by allowing them to transfer part of their 'Emission Rights' (Article 17) to one another. These rights are allocated based on the commitments made and calculated with "Assigned Amount Units" (AAUs). It is generally understood that less industrialized countries transfer their emission rights to those that are nearing their limits
And the "Joint Implementation" (JI), which essentially allows industrialized countries to invest in an emission reduction project and claim an equivalent amount of "Emission Reduction Units" (ERUs). This helps to distribute emission reduction efforts internationally in a collaborative manner.
Continuing, we move to the most recent legal instrument related to this topic: the "Paris Agreement" established in 2015. Unlike the "Kyoto Protocol" it is universal and non-binding (though compliance is anticipated) and in terms of emission reduction percentages and targets instead it aims to commit everyone to take action to mitigate Climate Change. How? Each country presents its own commitments (based on its realities and capabilities) for reduction, known as "Nationally Determined Contributions" (NDCs). It follows the goal of: 'keeping the increase in global average temperature well below 2°C above pre-industrial levels, and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels' (These are the ones presented by our country, Argentina, click here). And what happens to the 'Emissions Trading' established in Kyoto? It does not establish a system per se but opens the door for countries to develop their own carbon markets and other forms of voluntary collaboration. This means that countries have the flexibility to implement additional measures, such as internal carbon markets or bilateral agreements, to reduce their Greenhouse Gas Emissions.
Lastly, I would like to mention that beyond the international instruments and agreements at the global level, so much countries and regions have established their own mechanisms to regulate emissions at the national level. Notable examples include the European Union Emissions Trading System and California's Climate Action Program (also known as "The California Climate Action Registry" click here to learn more). Did you know the origin of the present situation? Reflecting on the past opens doors to new realities. #ForABetterWorld
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