OECD/IEA Release Paper on Building Blocks of Market Mechanisms

November 2010: The Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA) have released a joint secretariat information paper titled “Market Readiness: Building Blocks for Market Approaches,” in response to a request from the Climate Change Expert Group on the UNFCCC.

The paper examines essential elements of "market readiness" for possible new mechanisms and highlights some of the past and new market readiness activities, of use as UNFCCC parties are to consider decisions on future market approaches. It provides insights on the financing needs, timeframes and coordinated capacity building necessary to build successful domestic or international market mechanisms to address climate change. It reviews the technical readiness, policy readiness and institutional and legal readiness required by various market-based mechanisms currently in use or under consideration. It further outlines five-phases of bringing a policy to fruition, namely: assessing mitigation potential and policy instruments; carrying out a feasibility assessment and choosing market-based approaches; setting up the technical framework; aligning policy and legal/institutional framework; and piloting, testing and review. The document also includes a comprehensive, two-page summary table of building blocks for market mechanisms. [The Paper]