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Urban areas cause over 70% of direct and indirect CO2-emissions worldwide. To achieve the internationally agreed goal of limiting the global temperature increase to 1.5 to 2 ° C, considerable efforts to reduce emissions in cities are required. Mobilizing significant greenhouse gas reductions in cities is, however, a major challenge due to their very heterogeneous structures and a large number of small and varied emission sources (e.g. traffic, buildings). In addition, the organisational structures of urban emission sources are much more diverse than those of e.g. major industrial point sources. A general challenge for responsible decision-makers and institutions is that they have limited access to investment capital to implement large-scale measures to reduce greenhouse gas emissions.
Carbon market mechanisms under Article 6 of the Paris Agreement can offer new opportunities for the mobilisation of large-scale emission reduction measures and policies. This research project first examined the prevalence and experience of urban reduction projects within the framework of the Clean Development Mechanism (CDM), Nationally Appropriate Mitigation Actions (NAMAs) and Transformative Actions Programs (TAP). Building on this, various conceptual approaches to the implementation of Art. 6 in cities were developed. In order to take appropriate account of the different national structures and framework conditions, a “menu approach” with uniform principles and standards is proposed.
In addition, the study examines approaches to determine the additionality of urban mitigation activities and discusses various financing options.
Per-capita greenhouse gas emissions in cities like Bangkok or Shanghai have already reached emission levels of cities like London or Toronto. Large parts of the building stock and service infrastructure in cities in rapidly developing countries will be built in the coming decades—and may lock in high emissions pathways. A survey of projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol shows that only about 1% of projects have been submitted by municipalities, mostly in the waste management and more recently in the transport sector. This is probably due to a lack of technical know-how, legal barriers, methodological challenges, long project cycles and limited “visibility” of projects for the electorate. A case study of city network ICLEI’s experience with the CDM adds practical insights. We conclude that while the new market mechanisms under Article 6 may make it easier for municipalities to engage in international market mechanisms, new forms of cooperation between actors on multiple levels, potentially facilitated by ICLEI, are required to help to realize the urban potential in international market mechanisms.
