Colombia faces a number of challenges including growing electricity demand, increasing hydroelectric uncertainty as a result of changes in the el Niño weather phenomenon, and a growing need for social housing in metropolitan areas driven by accelerating urbanisation. At the same time, Colombia actively implementing its Nationally Determined Contribution (NDC) under the Paris Agreement. These include measures to improve energy efficiency in the residential sector overall. Some of which will also have a positive effect on energy efficiency in social housing. Policies for renewable electricity, building codes, and appliance energy performance standards all play a role in these efforts. However, these policies are not currently putting Colombia on a path towards the decarbonisation of the building sector that is needed to reach the temperature goals of the Paris Agreement. Through Article 6 of the Paris Agreement, countries can cooperate in NDC implementation to allow for higher climate ambition. This can offer opportunities for interventions in the building sector. Given the dynamic nature of the sector and number of actors, ensuring environmental integrity through an overall sectoral approach to Article 6 transfers is likely to be challenging especially in terms of additionality, baseline setting, and monitoring reporting and verification. However, there may be an opportunity to construct Net Zero Energy Buildings though an Article 6 pilot in the social housing sector, which would reduce energy consumption, reduce emissions, reduce energy poverty, reduce energy consumption subsidy payments, and improve public health and energy security. Such a pilot could, together with a larger policy roadmap towards increasingly stringent energy efficiency standards, help put the Colombian building sector on a path towards decarbonisation and alignment with the Paris Agreement.

This report analyses the interaction of the pilot Emissions Trading System (ETS) and the electricity market in Mexico. It does so along two main questions: a) How do ETS design features affect the environmental effectiveness of the system and the quality of the carbon price signal? b) How do electricity market design features affect the carbon price induced abatement in the power sector? Due to the absence of a carbon price during the pilot phase of the Mexican ETS, the assessment is based on expected effects based on publicly available data and expert interviews. The Mexican emissions trading scheme (ETS) started operation in 2020. The first three years are designated as a pilot phase with the expressed aim to gather experience in the implementation of an ETS in Mexico. At the time of writing, the first compliance cycle had not yet been finalized and - due to the specific rules for the pilot phase - there was not yet an established CO2 price. The Mexican electricity market is undergoing a period of great uncertainty, both in terms of the regulation of the electricity market itself but also in term of the ETS. It remains to be seen to which extent the energy reform of 2014 will be rolled back and which level of ambition the future climate policy will have. Together with the special rules during the pilot phase of the Mexican ETS it is unlikely that the trading system will have a noticeable impact in the short term on demand, supply, or investments. This case study is part of the project “Influence of market structures and market regulation on the carbon market” that aims to identify the impact of market structures and regulations on carbon markets and to investigate the interdependencies between carbon and energy markets in Europe, California, China, South Korea, and Mexico.

This study reviews the state of play of on-going EU environmental and climate legislation and pinpoints key challenges for the next five years. Challenges arise from the plans released by the president-elect, such as a new European Green Deal, the completion of work started in the previous term (e.g. the Regulation on a framework for sustainable finance and the completion of the multiannual finance framework), by reviews of legislation foreseen for the next term and the need for action where indicators show that current EU environment targets may not be achieved. This document was provided by Policy Department A at the request of the Committee on the Environment, Public Health and Food Safety of the European Parliament.

In December 2015 Parties adopted the Paris Agreement at the 21st session of the United Nations Framework Convention on Climate Change (UNFCCC). In its Article 2 governments agreed to limit global warming to “well below 2°C above pre-industrial levels” and to pursue to limit it to 1.5°C (UNFCCC 2015). The UNEP Emissions Gap Report 2015 showed that a gap of 14 GtCO2e exists for 2030 between the (unconditional) mitigation proposals submitted by Parties as part of their intended nationally determined contributions (INDCs) and a pathway compatible with holding temperature increase below 2°C (UNEP 2015b). Based on an analysis of 174 initiatives the study analyses the potential impact of these initiatives on GHG emissions in comparison to INDCs, identifies good practices shared by these initiatives and further discusses the relationship between these initiatives and the UNFCCC. The results inter alia reveal a global reduction potential of 5-11 GtCO2 equivalents/year of 19 initiatives till 2030.

The Paris Agreement sets out the framework for global efforts to address climate change after 2020. Article 6 of the agreement provides for international cooperation through carbon markets to achieve targets jointly on a voluntary basis. The new context of the Paris Agreement - particularly the universal commitment to regularly make increasingly ambitious contributions towards the global effort - present new challenges for carbon markets, especially for host countries. At the time of writing, the exact guidance, rules, modalities, and procedures for engagement through Article 6 remain the subject of ongoing negotiations. However, the three principles of allowing for higher mitigation ambition, promoting sustainable development, and ensuring environmental integrity are already solidly anchored in the Paris text. This guide proposes a number of considerations which countries hosting emission reduction activities should take into account when engaging in carbon markets under the Paris Agreement. It looks especially at how carbon market engagement relates to other aspects of national climate policy making and the fulfilment of commitments under the Paris regime. In addition to rationales to engage in Article 6, aspects relevant for the oversight and implementation of Article 6 are explored from the host country perspective. These include evaluating proposals, potential partners, and further suggestions on how to implement projects on the ground. The guide supports decision making for considerations to achieve overall mitigation in global emissions and the choice between engagement through Article 6.4 and Article 6.2, before sketching out interlinkages between Article 6 participation and other obligations under the Paris Agreement. A conclusion then includes a brief outlook for carbon markets.

This paper contributes to the review of the Market Stability Reserve (MSR) by assessing the operation of the MSR and by discussing important issues with respect to adapting and complementing the MSR parameters for Phase IV of the EU Emissions Trading System (EU ETS). The analysis focuses on the current cap architecture for Phase IV, while also considering more ambitious cap setting, with an emission reduction of 65% by 2030, compared to 2005, reflecting a potential outcome of revision of the EU ETS cap. We identify and propose reforms to key elements of the MSR. Specifically, we consider several reform options for the MSR feed and release parameters, a change in the definition of the Total Number of Allowances in Circulation (TNAC) thresholds to account for changing liquidity needs during Phase IV, and how to increase the speed of the MSR response within the current MSR architecture. We also discuss the pros and cons of introducing a hybrid system with both price and quantity based MSR triggers. Moreover, we discuss how to account for allowance demand from aviation and introduce invalidation of vintage allowances. We also analyze the interaction between the voluntary cancellation of allowances and the MSR and propose a rule-based cancellation mechanism to account for national initiatives to phase out coal-based power generation.

Um die globale Erwärmung durch den anthropogenen Klimawandel zu begrenzen, wurden Ziele zur Reduktion von Treibhausgasen auf internationaler, europäischer und deutscher Ebene (ebenso wie auf regionalen Ebenen) definiert. Die Zusammenhänge der verschiedenen Treibhausgasziele und de-ren Ausgestaltung werden erläutert, wobei der Fokus auf den europäischen Zielen der Jahre 2013-2020, dem europäischen Emissionshandelssystem (ETS) und der Effort-Sharing-Entscheidung (ESD) liegt.Seit der dritten Handelsperiode gibt es nur noch ein gesamteuropäisches Budget im ETS. Um verschie-dene Fragestellungen dennoch zu beantworten, ist es nötig, ein rechnerisches, nationales ETS-Budgetzu berechnen. Zu diesem Zweck werden verschiedene Ansätze zur Berechnung eines deutschen An-teils am ETS-Gesamtbudget in der Periode 2013-2020 dargestellt, verglichen und diskutiert. Da es we-der eindeutige Vorgaben oder Maßstäbe für die Definition nationaler ETS-Budgets in dieser Periode gibt und auch unterschiedliche Vor- und Nachteile der Methoden vorliegen, werden schließlich unter-schiedliche Ansätze in verschiedenen Fragestellungen verwendet. So wird die Frage nach der Handels-bilanz von Deutschland im ETS betrachtet, ebenso wie die Verwendung des ETS-Budgets als Minde-rungspfad. Außerdem werden die europäischen Zielsetzungen mit dem nationalen Treibhausgasziel im Jahr 2020 verglichen und die Möglichkeit der bilanziellen Betrachtung der ETS-Emissionen für nati-onale Zielsetzungen diskutiert.