Oslo, December 2011

Even as discussions in Durban on what should succeed the Kyoto Protocol appear as intractable as ever, momentum is building towards the emergence of new ways to tackle emissions in the developing world, beyond the Clean Development Mechanism ( CDM), in the shape of new crediting mechanisms.

Of the many proposed new crediting mechanisms on the table, Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD) and bilateral programmes are the most likely to start generating credits before 2020. It is also likely that the crediting of National Appropriate Mitigation Actions (NAMAs) will take place by 2020, but on a more limited scale, according to analysis recently published by Thomson Reuters Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.

Like the CDM, the new crediting mechanisms have the potential to generate credits by reducing emissions below a predetermined baseline – either at the sector or project level. These credits can then be used as international offsets that governments and private sector actors can apply toward their national or individual emission reduction targets. Unlike the CDM, most new crediting mechanisms represent a large-scale approach to emissions reduction (see notes for editors).

REDD projects, bilateral programmes and NAMAs combined could generate between 500-800 Mt of emissions reductions in the 2013-2020 period. Of these, 200-300 Mt would be generated by the REDD mechanism, Japan’s bilateral offset mechanisms could generate 200-300 Mt and 100-200 Mt would be generated through NAMA crediting.

According to Carina Heimdal, Editor, Crediting mechanisms and Emerging carbon markets, Thomson Reuters Point Carbon and author of the analysis; “Despite the considerable potential for new mechanisms, a lack of demand for new credits and the time needed to agree the shape of new international crediting mechanisms mean that, in the 2013-2020 period, the CDM will remain the main source of international offsets, generating some 2.7bn CERs”.

According to Arne Eik. Head of Crediting mechanisms and Emerging carbon markets, Thomson Reuters Point Carbon; “Since we expect the international climate change framework from 2013 to take the shape of a loose pledge-and-review system, without a second Kyoto commitment period, then, collectively, these new market mechanisms will play an important contribution towards reaching governments’ and private sector’s emission reduction targets. These new mechanisms meet the growing need for new, large-scale emissions reductions approaches to complement the Kyoto Protocol’s existing flexible mechanisms”.

Given the role that new crediting mechanisms will play in international emission reduction efforts, Thomson Reuters Point Carbon has launched a New Credits Database (NCD) which details voluntary market projects in different host countries and developed under various projects standards, including over 100 REDD projects and some 100 projects that will be implemented under the Bilateral Offset Credit Mechanism.

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