Approaches to the exchange of mitigation outcomes

Abstract

Climate literature and policy typically differentiate between carbon markets and carbon taxation as the two main approaches to pricing carbon and subsequent ‘exchange’ of mitigation outcomes. Additional approaches, such as bilateral direct exchanges between parties or climate-related quantitative easing, have been discussed over time. A clear distinction between these approaches has been maintained to ‘safeguard’ their independence. Yet, the correlated fragmentation of policies addressing climate change has led to high degrees of uncertainty regarding their aggregate efficacy. By introducing a single mechanism to certify mitigation outcomes, the Mitigation Alliance (MA) helps converge previously separated approaches towards a common objective without limiting flexibility. As a consequence, the MA provides its members with a significant variety of policy, strategy and action options concerning the exchange of mitigation outcomes, while guaranteeing harmonisation and consistency with its holistic architecture. Organising the exchange approaches into three macro-typologies (market, non-market and hybrid), the Chapter outlines the MA’s multi-level, hybrid governance model.