ICC Discussion Paper on Market Mechanisms in the post-2012 GHG Regime:

Climate change is a global problem that requires a global solution. Greenhouse gas emissions today are growing in many countries - most rapidly in developing nations. Stabilization of carbon dioxide, in particular, will require emissions to peak and decline globally ultimately to very low levels.

The flexible mechanisms introduced under the United Nations Framework Convention (UNFCCC) Kyoto Protocol as well as new ones that are now under discussion allow nations to meet their obligations through actions outside their own borders. In general, they include emissions trading and utilization of investments in international offsets.

These are market-based approaches that help to limit the overall cost to society of achieving climate objectives. By themselves such market-based international mechanisms do not provide a complete solution. They must work in conjunction with national policies and in the framework of other international policy, such as policies governing trade and investment. They are necessary but not sufficient.

ICC supports a UNFCCC post-2012 agreement that provides a clear and predictable framework in which business can contribute solutions and considers that appropriately designed market-based and market approaches to address emissions can make a major contribution to that goal, in the context of other policy approaches and enabling frameworks.

We support efforts to expand the scope, simplify and improve procedures in the Clean Development Mechanism (CDM), and are ready to work with governments and negotiators to seek effective new ones as well as other market-based approaches. New mechanisms could bring value. This paper will discuss the ICC’s view on the role of market mechanisms in the post-2012 regime in general, but will focus on the role, shape and conditions for the deployment of carbon markets.