Towards net zero: making baselines for international carbon markets dynamic by applying ‘ambition coefficients’

This paper discusses options to increase mitigation ambition in crediting mechanisms that serve the Paris Agreement (PA), such as Article 6.4 mechanism. Under Clean Development Mechanism and other mechanisms, baselines have been specified form of greenhouse gas (GHG) intensity factors linked business-as-usual developments. means with increasing production goods services through carbon market activities, absolute emissions may or fall only slowly. At a global level, an approach widens ‘emissions gap’. To enable continued use while being line PA’s goal pursue efforts limit temperature rise 1.5°C, we propose apply ‘ambition coefficient’ intensities technologies when establishing baseline. coefficient would decrease reflect over time, reach zero country needs net emissions. Due principle common but differentiated responsibilities respective capabilities, more quickly for developed than developing countries. The latter be able generate emission reduction credits well beyond 2050, former, stop around 2035 before. An certainty investors preserve trust international markets operate agreed, long-term climate regime.Key policy insights can help align activities GHG pathways at ensure will not lead lock-in participating countries.The ‘bridging proposal’ operationalization PA markets. It resolve negotiation gridlock between those who want stringency instruments think should generated stringent NDCs, facilitated by cost savings increased financial resources markets.The alignment existing methodologies necessary levels implement PA, also keeping transaction costs low.