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OECD/IEA Brief Highlights Options for Developing Country Participation in Market Mechanisms

November 2010: The Organisation for Economic Co-operation and Development (OECD), together with the International Energy Agency (IEA), has released a policy brief titled “Scaled-up Market Mechanisms – What is Needed to Move Forward?” as part of a series of documents summarizing the OECD's climate change-related work.

The policy brief discusses options for designing post-2012, scaled-up, market-based mechanisms that best enable developing country participation, focusing on the two categories of crediting and trading, which both can be based on either absolute or intensity-based emissions targets. The brief finds that: scaled-up market mechanisms can be more environmentally ambitious than a pure "offset" mechanism like the Clean Development Mechanism (CDM); scaled-up market mechanisms could bring considerable benefits to developing countries; sectoral intensity baselines would probably differ from one country to the other; both political and technical decisions are needed to establish scaled-up market mechanisms; implementing scaled-up market mechanisms will face domestic and international challenges; and domestic measures need to overcome the mismatch in incentives. The brief also discusses issues that need to be addressed going forward, such as market readiness, sector-specific solutions, appropriate timing, and balancing supply and demand. [The Policy Brief]