Market Mechanisms for Climate Change Mitigation at the Urban Level Have Great Potential

May 2015 - On 7-8 May, more than 70 experts from 27 countries met in Berlin for the 15th Climate Technology Initiative (CTI) Workshop to discuss the relevance of market mechanisms for climate change mitigation in cities. The German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) had organised the workshop which provided a platform for exchange for policy experts, decision-makers, scientists and representatives of financial institutions who work on mitigation at the urban level and market-based climate instruments.

Under the heading "Market Mechanisms for Climate Action at the Urban Level" this year's CTI Workshop applied the perspective of market-based climate instruments to the city level. In addition to considering integrated climate action in cities, the workshop focused on the sectors buildings and construction, transport as well as waste and discussed the question of how market mechanisms are or can be applied in these sectors to reduce greenhouse gas (GHG) emissions effectively and sustainably.

One of the event's main insights was that particularly carbon market mechanisms can be relevant for mitigation actions in cities; their comprehensive implementation at the urban level depends to a great extent on the outcomes of the upcoming climate conference (COP) in Paris. At the moment, the low price for emissions certificates is the main barrier for a more extensive use of carbon market mechanisms; this also holds true for the city context.

Great Potential for integrated mitigation measures in cities

In the opening panel discussion of the CTI Workshop two experts on market mechanisms joined two experts from the field of climate action in cities. The panel came to the conclusion that cities require more autonomy and competencies for implementing climate change mitigation measures that apply market mechanisms. Further, the panellists saw a significant potential for integrated approaches to climate actions at the city level that (i) combine mitigation and adaptation; and (ii) interlink horizontally with other city actors and initiatives as well as vertically with national initiatives. Apart from the upcoming COP in Paris the experts also pointed to the relevance of the HABITAT III Conference in Quito in 2016 that is also likely to give new impetus to climate change mitigation action at the city level.

Co-benefits of climate actions key

This initial session was followed by a session dealing with the various types of market-based instruments for climate change mitigation. After the presentation of different instruments such as the Clean Development Mechanisms (CDM), Urban Emission Trading Schemes or New Market Mechanisms, the speakers discussed the relevance of these instruments for the city level. They highlighted the importance of market mechanisms' co-benefits for the urban level. For instance, non-quantifiable impacts such as a reduction in noise pollution or increased road safety can be stronger arguments for certain measures in the transport sector than emission reductions alone. To meet those specific challenges in the urban context, new methodologies need to be developed and applied. Moreover, Monitoring, Reporting and Verification (MRV) standards need to be harmonised with the specific requirements of the urban level. Finally, the panellists pointed to the fact that the selection of a specific instrument for mitigation actions always depends on the respective local conditions.

Application of Market-Based Mechanisms in Cities Still Low - Challenges Continue

The following session on market-based mechanisms in the urban context clearly showed that some initiatives for mitigation actions at the city level already exist, while the application of market mechanisms is still in its infancy. Promoting their application is the mandate of various support programmes that commit themselves to the application of market mechanisms or the support of cities in their efforts for climate change mitigation in general. The last session of day 1 of the CTI Workshop was dedicated to these support programmes.

The second day of the Workshop focused on the urban sectors building and construction, transport, and waste. In three sessions the speakers presented projects, programmes and initiatives that apply market mechanisms in the respective sectors or show potential for such application. In all sectors, data collection, the establishment of baselines and the MRV of emission reductions continue to be key challenges.