Partnership for Market Readiness Technical Papers

43 items available

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Technical notes that describe and support the activities of the Partnership for Market Readiness (PMR) and aid the PMR Participants in their policy work as well as spur a dialogue on the design, implementation, and linking of carbon market instruments.

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  • Publication
    Governance of Emissions Trading Systems
    (World Bank, Washington, DC, 2022) Partnership for Market Readiness; International Carbon Action Partnership
    Emissions trading continues to expand as a flexible policy response to climate change. Its implementation raises complex governance challenges, however, and calls for robust institutional, regulatory and procedural frameworks. Unlike aspects of technical design and implementation, the governance of emissions trading systems (ETSs) has found less extensive treatment in the available knowledge base. However, existing systems offer valuable insights into the successful governance of emissions trading from the initial establishment and routine operation of an ETS to the review of its performance and the management of change. This report draws on such experiences to provide guidance on the governance of an ETS across all stages of its evolution.
  • Publication
    From the Ground Up: A Decade of Lessons on Carbon Pricing
    (World Bank, Washington, DC, 2021-07-27) Partnership for Market Readiness
    The World Bank’s partnership for market readiness (PMR), through grant support and technical assistance, supported 23 emerging economies and developing countries in building their institutional and human capacities to design, institute, and implement carbon pricing instruments, such as emission trading systems, carbon taxes, and or carbon crediting mechanisms along with underlying infrastructure such as monitoring, reporting and verification (MRV) and registry systems. As the PMR winds down and its successor - the partnership for market implementation (PMI) - becomes operational in 2021, the time is opportune to take stock of and analyze key lessons learned from the decade of PMR experience. This report draws lessons from the PMR’s decade-long country, technical work, and policy analysis work programs and relates the insights captured through its extensive country participant consultation process, its online surveys, and feedback from its contributing country partners and World Bank task teams. The lessons documented in this report are expected to provide practical insights for other developing countries planning to design and implement carbon pricing initiatives. In addition, the lessons learned on the PMR process, as well as the grant implementation process, are likely to help similar initiatives, including the PMI, to adopt improved program design and governance options that support efficient funds allocation, deployment, and implementation.
  • Publication
    Enhancing Carbon Pricing and International Carbon Market Readiness Through the Mitigation Action Assessment Protocol: Summary Report
    (World Bank, Washington, DC, 2021-07-21) Partnership for Market Readiness
    Putting a price on carbon can be an indispensable part of a country’s strategy to reduce emissions in an efficient way. Furthermore, putting a price on carbon through international carbon markets can also offer significant cost benefits and enable flexibility in achieving emission reduction targets. Article 6 of the Paris Agreement provides a potential basis for bottom-up carbon market linkage. Under the Paris Agreement, carbon pricing policies and international carbon markets are increasingly developed bottom up and are diverse in nature to accommodate countries’ domestic priorities. While this bottom-up development promotes innovation, the diversity of approaches reduces transparency between climate actions and increases the complexity of market integration. A standardized framework is needed to assess countries’ capacity building needs to participate in carbon pricing and international carbon markets. The World Bank initiated the development of the mitigation action assessment protocol (MAAP) in 2015 to drive meaningful assessment of diverse climate actions. Pilots results showed that MAAP provides a transparent and relatively easy-to-use framework to help countries identify strengths and opportunities for improvement. Future implementation of the tool will seek to address identified challenges such as collecting evidence, identifying capacity building priorities, and providing guidance on communication strategies. This report summarizes key findings and lessons learned from pilots.
  • Publication
    Climate Responsive Economic Recovery: Post-Pandemic Opportunities in Mashreq
    (World Bank, Washington, DC, 2021-07) Ahmad, Ali; Ranade, Monali
    In Mashreq, climate change and fragility form a vicious cycle wherein current fragility hinders climate action and climate threats will exacerbate fragility. The Coronavirus (COVID-19) pandemic has brought an acute disruption to the global economy, yet its most profound effects have been felt in weak and fragile states, including Mashreq countries. Reimagining a post-Covid-19 climate-responsive economic recovery presents a critical opportunity to break away from this cycle and align economic, development, and climate agendas. This report highlights some of the opportunities available for Mashreq countries, focusing on Iraq, Jordan and Lebanon, to couple climate action with post-pandemic economic recovery. The main audience of this report are the governments, policy makers, development community and stakeholders in Mashreq interested in exploring climate responsive opportunities to support economic recovery.
  • Publication
    Beyond Mitigation: Quantifying the Development Benefits of Carbon Pricing
    (Washington, DC: World Bank, 2021-05-26) Partnership for Market Readiness
    Carbon pricing can reduce emissions cost-effectively, and it can also generate a number of other benefits. This guide provides an overview of these benefits to help policy makers advance a variety of sustainable development objectives in their own countries and around the world. Carbon prices are broadly recognized as necessary for correcting market failures that arise from pollution externalities, because the prices paid for using fossil fuels do not come close to compensating society for the costs that greenhouse gas (GHG) emissions impose on society. Where there is a divergence between (externality-based) social costs and private values, carbon pricing is an essential environmental policy tool. The purpose of this guide is to help policy makers identify and measure carbon-pricing benefits. In particular, it provides insights into how to incorporate benefits into computable general equilibrium (CGE) modeling.
  • Publication
    Carbon Pricing Assessment and Decision-Making: A Guide to Adopting a Carbon Price
    (World Bank, Washington, DC, 2021-04-06) Partnership for Market Readiness
    Many countries and subnational jurisdictions are considering putting a price on carbon to help reduce greenhouse gas (GHG) emissions and achieve their climate commitments. There are currently 64 carbon pricing instruments (CPIs) in place or in the process of implementation, with 10 launched in 2019 alone. Before a jurisdiction implements a CPI, it will often examine the role a CPI will play and the rationale for adopting it. The objective of this guide is to help policymakers build the case for carbon pricing and choose an appropriate CPI. Chapter one sets out the rationale for putting an explicit price on carbon and examines the two main options for implementation: emissions trading system (ETSs) and carbon taxes. Chapter two outlines the local conditions that policymakers need to consider. Chapter three outlines how to assess the potential impacts of carbon pricing on key stakeholders. Chapter four describes how the work done in the previous sections can be used to make an informed recommendation for carbon pricing implementation, and how the recommendation can then be communicated effectively.
  • Publication
    Emissions Trading in Practice, Second Edition: A Handbook on Design and Implementation
    (World Bank, Washington, DC, 2021-04) Partnership for Market Readiness; International Carbon Action Partnership
    Currently, about 46 national jurisdictions and 35 cities, states, and regions, representing almost a quarter of global greenhouse gas (GHG) emissions, are putting a price on carbon as a central component of their efforts to reduce emissions and place their growth trajectory on a more sustainable footing. An increasing number of these jurisdictions are approaching carbon pricing through the design and implementation of Emissions Trading Systems (ETS). As of 2021, ETSs were operating across four continents in 38 countries, 18 states or provinces, and six cities covering over 40 percent of global gross domestic product (GDP), and additional systems are under development. This handbook sets out a 10-step process for designing and implementing an ETS. These steps are interdependent, and the choices made at each step will have important repercussions for decisions in the other steps. In practice the process of ETS design will be iterative rather than linear. The need to adjust and adapt policies over time is reflected in the update of this handbook, which was first released in 2016. New insights, approaches, and designs have proliferated adjusting the way ETSs operate and further developing our understanding of them.
  • Publication
    Country Perspectives: Opportunities and Challenges for International Voluntary Carbon Markets in the Context of the Paris Agreement
    (World Bank, Washington, DC, 2021-04) Partnership for Market Readiness
    The Paris Agreement, with its universal requirement on all countries to submit nationally determined contributions (NDCs), marks a significant change for the framework of international cooperation through carbon markets. With all countries committing themselves to climate action to reduce emissions and achieve their NDCs, the ability to exert exclusive claims over the emission impact from carbon market investments and count them towards emission targets is becoming increasingly complicated. This study seeks to understand perspectives of potential host countries on the role international voluntary carbon markets might play in the context of their NDCs and the Paris Agreement. In doing so, it explores emerging issues and challenges these markets may face and clarifies key aspects host country governments may need to consider in relation to their market participation. The study takes voluntary carbon markets to refer to carbon market transactions that are undertaken by entities on a voluntary basis and not as a result of any policy-related regulatory requirements. Recent years have already seen traditional distinctions between voluntary and regulatory markets break down as standards bodies and the push for environmental and social co-benefits begin to cross the old boundaries. And increasingly, companies are adopting net-zero emission targets, which has been accompanied by a surge of interest and investment in the voluntary carbon market. Indications are that voluntary action and voluntary demand for credits is on an upward trajectory and expected to witness substantial growth in the coming years. A greater understanding of host countries’ roles in international voluntary carbon markets, aligned with the Paris Agreement, will help to build on this momentum.
  • Publication
    A Guide to Developing Domestic Carbon Crediting Mechanisms
    (World Bank, Washington, DC, 2021-03-15) Partnership for Market Readiness
    This guide to developing domestic carbon crediting mechanisms is intended to assist national and subnational policymakers considering whether and how to establish a carbon crediting mechanism in their jurisdiction. The guide provides insights into the decision points for designing a crediting mechanism and how to tailor the mechanism to achieve domestic policy objectives. This guide is divided into 10 chapters representing the key elements that must be considered when setting up a domestic crediting mechanism. These chapters should be seen as the building blocks for developing a crediting mechanism, rather than linear steps in a decision-making process. Policymakers can decide on issues simultaneously or in a different order than envisioned to suit the specific circumstances of jurisdiction.
  • Publication
    Mexico: Paving the Way for the Development of Emissions Trading
    (World Bank, Washington, DC, 2021-03) Partnership for Market Readiness
    Mexico has made great strides recently in its fight against climate change. The enactment of the Climate Change Law in 2012 and its reform in 2018 led to the creation of a series of administrative and policy instruments to guide domestic action on climate mitigation and adaptation. The development and implementation of this agenda created new and different challenges involving the design and adoption of new fiscal, economic, and market-based instruments. Mexico opted for the development of an Emission Trading Scheme (ETS) as its main instrument to scale up climate change mitigation efforts. To address design and implementation challenges, the country sought avenues of international cooperation and technical assistance, including by joining the Partnership for Market Readiness (PMR). Established and managed by the World Bank, the PMR is a grant-based, global partnership that provides systemic support and funding for technical and institutional capacity development and piloting of new and innovative market-based instruments. This report presents the main activities undertaken under the project and identifies the main outcomes. Observed results confirm the important contribution of this project to the Mexican development and climate policy landscape, developing technical knowledge products, practical tools and capacity building activities that are shaping the design of the national carbon pricing policy mix and informed the review of the NDC (submitted to the UNFCCC in December 2020). The report is organized as follows: section two outlines the country context prior to the PMR project; section three outlines the project goals; the implementation process and the key outcomes; and final sections evaluate the impacts of the project in the country and outlines next steps, lessons learned, and recommendations.