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Investigating Buyer Preferences in Climate Finance Under Article 6.2 of the Paris Agreement

Schultheis, Simon LU (2024) In IIIEE Masters Thesis IMEM01 20241
The International Institute for Industrial Environmental Economics
Abstract (Swedish)
This thesis investigates buyer preferences in the procurement of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 of the Paris Agreement, which facilitates international cooperation through carbon markets. As ITMO markets are still in the early stages of development, uncertainties regarding regulatory frameworks, environmental integrity, and procurement strategies have emerged, impacting the pace of engagement by both sovereign and private actors.
The research aims to examine the behavior, motivations, and strategies of parties engaging in ITMO transactions, with a focus on understanding how buyers prioritize carbon quality and non-carbon attributes such as co-benefits. The study specifically addresses the... (More)
This thesis investigates buyer preferences in the procurement of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 of the Paris Agreement, which facilitates international cooperation through carbon markets. As ITMO markets are still in the early stages of development, uncertainties regarding regulatory frameworks, environmental integrity, and procurement strategies have emerged, impacting the pace of engagement by both sovereign and private actors.
The research aims to examine the behavior, motivations, and strategies of parties engaging in ITMO transactions, with a focus on understanding how buyers prioritize carbon quality and non-carbon attributes such as co-benefits. The study specifically addresses the research questions: (1) What are the current procurement practices of parties under the Article 6.2 framework regarding ITMOs? (2) What is the potential for Article 6.2 to contribute to global net-zero emissions by 2050?
Data were collected through semi-structured interviews with experts from various sectors, including governments, NGOs, and carbon market participants. Document analysis of Mitigation Activity Design Documents (MADDs) and Memoranda of Understanding (MoUs) supplemented the interview data. The analysis focused on key themes, including behavioral influences, environmental integrity, and co-benefits.
The findings indicate that early movers in the ITMO market exhibit risk-averse behavior, prioritizing low-risk technological projects with minimal emphasis on non-carbon attributes. This cautious approach has implications for market growth and environmental integrity, as buyers focus on compliance rather than innovation.
The thesis concludes that, without stronger regulatory oversight and a more ambitious approach from buyers, the potential for Article 6.2 to drive meaningful progress toward net-zero emissions by 2050 is limited. Recommendations include increasing centralized oversight and encouraging public-private partnerships to enhance market integrity. (Less)
Please use this url to cite or link to this publication:
author
Schultheis, Simon LU
supervisor
organization
alternative title
A qualitative stakeholder analysis of actors involved in procuring Internationally Transferred Mitigation Outcomes (ITMOs)
course
IMEM01 20241
year
type
H2 - Master's Degree (Two Years)
subject
keywords
CORSIA, Corresponding Adjustment, Carbon Markets, CDM, Cooperative Approaches
publication/series
IIIEE Masters Thesis
report number
2024.38
ISSN
1401-9191
language
English
id
9176996
date added to LUP
2024-10-24 10:19:09
date last changed
2024-10-24 10:19:09
@misc{9176996,
  abstract     = {{This thesis investigates buyer preferences in the procurement of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 of the Paris Agreement, which facilitates international cooperation through carbon markets. As ITMO markets are still in the early stages of development, uncertainties regarding regulatory frameworks, environmental integrity, and procurement strategies have emerged, impacting the pace of engagement by both sovereign and private actors.
The research aims to examine the behavior, motivations, and strategies of parties engaging in ITMO transactions, with a focus on understanding how buyers prioritize carbon quality and non-carbon attributes such as co-benefits. The study specifically addresses the research questions: (1) What are the current procurement practices of parties under the Article 6.2 framework regarding ITMOs? (2) What is the potential for Article 6.2 to contribute to global net-zero emissions by 2050?
Data were collected through semi-structured interviews with experts from various sectors, including governments, NGOs, and carbon market participants. Document analysis of Mitigation Activity Design Documents (MADDs) and Memoranda of Understanding (MoUs) supplemented the interview data. The analysis focused on key themes, including behavioral influences, environmental integrity, and co-benefits.
The findings indicate that early movers in the ITMO market exhibit risk-averse behavior, prioritizing low-risk technological projects with minimal emphasis on non-carbon attributes. This cautious approach has implications for market growth and environmental integrity, as buyers focus on compliance rather than innovation.
The thesis concludes that, without stronger regulatory oversight and a more ambitious approach from buyers, the potential for Article 6.2 to drive meaningful progress toward net-zero emissions by 2050 is limited. Recommendations include increasing centralized oversight and encouraging public-private partnerships to enhance market integrity.}},
  author       = {{Schultheis, Simon}},
  issn         = {{1401-9191}},
  language     = {{eng}},
  note         = {{Student Paper}},
  series       = {{IIIEE Masters Thesis}},
  title        = {{Investigating Buyer Preferences in Climate Finance Under Article 6.2 of the Paris Agreement}},
  year         = {{2024}},
}