By Suzi Kerr (Motu Economic and Public Policy Research) and Mike Toman (World Bank)
More than a year has passed since the signing of the Paris Agreement under the United Nations Framework Convention on Climate Change, in which developed, emerging and developing countries across the world have pledged to limit or reduce their greenhouse gas emissions (GHGs) as a start toward limiting dangerous climate change. Under the Agreement, countries can work together to reduce emissions. Mike Toman, a Lead Economist in the World Bank’s Development Research Group, and Motu’s Suzi Kerr have come up with three basic guidelines for financing of emissions reductions in less economically advanced countries: 1. Do not conflate “international carbon markets” with “internationally transferred mitigation outcomes.” 2. Be cautious about the apparent gains from linking emissions trading markets. 3. Create contracts between developed and developing country governments for internationally transferred mitigation obligations.