GAO S. et al.

/ Advances in Climate Change Research 10 (2019) 21e29 23

Types of
Scope tradable Governance
unis

CAs SDM

Internationally
Types of transferred Decentralized
mitigation The scope of Emission Centralized under
mitigation reduction credits the COP
bilateral &
activities that SDM multilateral
produce ITMOs outcomes
(ITMOs)

Fig. 1. Key elements of the international carbon markets.

issues related to the extent of decentralized governance 3. Key issues on international carbon markets in
and the role of the Conference of Parties serving as the negotiations
meeting of the Parties to the Paris Agreement (CMA).
3.1. Key issues on CAs

2.2. Sustainable development mechanism 3.1.1. Scope of the guidance and governance
As shown in Fig. 2, the scope of the guidance for CAs is
The sustainable development mechanism, which is estab- closely related to its governance. Two views can be identified
lished under the authority and guidance of the CMA, allows in relation to the scope of such guidance (ADB, 2018), the
Parties to use emission reduction outcomes generated by this guidance only covers accounting rules, and therefore, can
mechanism as a host country or a buyer country to achieve only ensure that the transfer of ITMOs is represented in an
their NDCs. It aims to promote mitigation and foster sus- accurate way to avoid double accounting; and, the guidance
tainable development while ensuring overall mitigation in needs to ensure environmental integrity and promote sus-
global emissions (Healy, 2017). tainable development, which means it covers how you
transfer an ITMO, as well as what you transfer. In this view,
(1) The SDM could be regarded as the successor of the an ITMO should meet certain environmental characteristics.
clean development mechanism (CDM) in post-2020 to When the scope of the guidance only covers accounting
some extent. Although the CDM involves the program of rules, Parties will make their own criteria for ensuring
mitigation activities, it remains a project-based market environmental integrity of an ITMO, which will be trans-
mechanism with limited emission reductions. Most parent to other Parties based on the transparency provisions
Parties believe that the SDM would cover mitigation under Article 13, and the bilateral and multilateral aspect of
activities at the sectoral, sub-sectoral or cross-sectoral CAs will ensure a check for environmental integrity. This
levels (Cames et al., 2016). Furthermore, there is a option is a completely decentralized and unbinding climate
wealth of experience and expertise with the project- change regime. When the scope of the guidance extends to
based mechanisms, and discussions on the transition of ensuring environmental integrity and promoting sustainable
the CDM to the SDM are also under way (Marcu, 2014). development, there are two kinds of governance available: (i)
Therefore, both the project- and sectoral-level mitigation a decentralized governance, and (ii) a centralized gover-
activities would be incorporated in the SDM. nance. In a decentralized governance, the CMA only sets
(2) Although Article 6 does not mention the mechanism general principles or guidelines for environmental integrity
type of the SDM, the additionality presented in Article and sustainable development, whereby Parties develop the
6.4 implies that it would be a crediting mechanism specific standards. This option will contain additional
(Marcu, 2016; Zeng and Dang, 2017). Therefore, the disclosure provisions under Article 13 on how the ITMOs
type of tradable unit under the SDM is the certificated meet the standards, and require a technical peer review
emission reduction credit. process. Therefore, this option is a decentralized climate
(3) The SDM will be a centralized mechanism which is change regime but has a certain binding force. Meanwhile
supervised by the CMA. However, considering the under a centralized governance, the CMA sets out the spe-
bottom-up architecture of the PA, the host country cific standards, provides the review process, and supervises
government would be more involved compared with the the approval, issuance and transfer of ITMOs. This option is
CDM (Marcu, 2017b). similar to the CDM and has strong binding force.