Assessing the structural capacity requirements that would allow developing countries to participate in evolving carbon markets.
The aim of this paper is to set out the structural capacity necessary for developing countries to participate in an evolving carbon market. The main body of this paper looks at the capacity needed for developing countries to participate in existing market mechanisms (i.e. the Clean Development Mechanism (CDM)), taking account of the way it may change over time; and possible new mechanisms such as large-scale crediting and trading. This analysis will be followed by two in-depth country case studies: Ghana and Uganda. The case studies will provide a live illustration of the practical capacity needed for these two countries to efficiently participate in an evolving carbon market, highlighting current obstacles and what can be done to overcome them.
This paper takes a macro view of the capacity needs in developing countries, differentiating between ‘low income’, ‘middle income’ and ‘advanced’ developing countries. Whilst there are exceptions, it is generally true that advanced developing countries will have greater capacity for adopting new market mechanisms than low income and middle income countries because advanced developing countries are at a more advanced stage of economic development.
Throughout the paper there are a number of recommendations promoting the establishment of institutional bodies at the developing country level which could help facilitate the aggregation of data, technical expertise and other necessary capacity for increased carbon market participation. The set up of such institutional entities will support the aggregation of different levels of capacity and be sufficiently flexible to develop over time with new market mechanisms as they evolve. The main body concludes with a summary of these institutional recommendations and a pathway analysis illustrating the capacity requirements at each carbon market mechanism level.
Marmanie Consulting Ltd, London, UK, 30 pp.