Translating Article 6 Into Market Readiness

Date : Wednesday, 5 December 2018
Time : 13.00 – 14.20
Venue : Indonesia Pavilion at COP 24, Zone E, GF Spodek Arena, Katowice, Poland


Market instruments represent useful tools to achieve cost-effective mitigation action. Implemented correctly, they can increase flexibility and scale up mitigation ambition. Article 6 of the Paris Agreement provides a foundation for international cooperation through markets and inspires countries to assess options according to their own capacities. An important next step in advancing the Paris Agreement is the formulation of rules and regulations for the use of markets, and the design and support of respective mitigation action in line with Article 6. Indonesia may as well look into options to use both Art. 6.2 and 6.4, or use either of the mechanisms in a different way. As the detailed rules for Article 6 are under development, the potential use of markets under the Paris Agreement leaves much room for interpretation.

As many countries do, Indonesia seeks the possibility to establish and enhance market-based mitigation action and use carbon pricing to achieve climate related objectives. “Market-based instruments” in this context refers to domestic instruments, such as emissions trading schemes (ETS), and scaled-up marketbased mechanisms, such as offset systems, which may have domestic and international elements. Together with fiscal instruments such as carbon tax, it forms carbon pricing where GHG emissions are economically valued to encourage emissions reduction.

Now, Indonesia is looking forward to having a well-developed carbon market by virtue of positive cooperation with international institutions including the Partnership for Market Readiness (PMR).

The purpose of this discussion is thus to take a closer look at Indonesia’s effort on market-based instruments development in a post-Paris agenda.



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