Environmental integrity of international carbon market mechanisms under the Paris Agreement

Schneider, Lambert; Theuer, Stephanie La Hoz

doi:10.1080/14693062.2018.1521332

Cited by 109 publications

(62 citation statements)

References 53 publications

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“…The carbon market defines virtual carbon emission rights as scarce valuable assets, gives them commodity attributes, and realizes the target of resource allocation and emission reduction through market transaction among reduction entities. The signing of the Paris Agreement in December 2015 further highlights the carbon market's capital allocation for achieving emission reduction on a global scale [1]. As a core issue of the carbon market mechanism, accurate forecasting of the carbon price can develop an efficient carbon pricing mechanism, and also help investors to avoid market risks and to increase returns.…”

Section: Introductionmentioning

confidence: 99%

A Novel Extended Higher-Order Moment Multi-Factor Framework for Forecasting the Carbon Price: Testing on the Multilayer Long Short-Term Memory Network

Yun

Zhang

et al. 2020

Sustainability

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Predicting the carbon price accurately can not only promote the sustainability of the carbon market and the price driving mechanism of carbon emissions, but can also help investors avoid market risks and increase returns. However, previous research has only focused on the low-order moment perspective of the returns for predicting the carbon price, while ignoring the shock of extreme events and market asymmetry originating from its pricing factor markets. In this paper, a novel extended higher-order moment multi-factor framework (EHM-APT) was formed to improve the prediction and to capture the driving mechanism of the carbon price. Furthermore, a multi-layer and multi-variable Long Short-Term Memory Network (Multi-LSTM) model was constructed so that the parameters and structure could be determined experimentally for testing the performance of the proposed framework. The results show that the pricing framework considers the shock of extreme events and market asymmetry and can improve the prediction compared with a framework that does not consider the shock of higher-order moment terms. Additionally, the Multi-LSTM model is more competitive for prediction than other benchmark models. This conclusion proves the rationality and accuracy of the proposed framework. The application of the pricing framework encourages investors and financial institutions to pay more attention to the pricing factor of extreme events and market asymmetry for accurate price prediction and investment analysis.

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Section: Introductionmentioning

confidence: 99%

A Novel Extended Higher-Order Moment Multi-Factor Framework for Forecasting the Carbon Price: Testing on the Multilayer Long Short-Term Memory Network

Yun

Zhang

et al. 2020

Sustainability

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“…Clearly all states of the world could not claim mitigation outcomes, otherwise it would dilute the incentive for blue carbon protection, if not neutralize it altogether. Relatedly, ensuring additionality of enhanced carbon sinks and preventing double-counting of emission abatement efforts are common concerns within international climate change policy and an ongoing theme of Article 6 Rulebook negotiations (Schneider & Theuer, 2018).…”

Section: Attribution and Additionalitymentioning

confidence: 99%

Protecting Antarctic blue carbon: as marine ice retreats can the law fill the gap?

et al. 2019

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As marine-ice around Antarctica retracts, a vast 'blue carbon' sink, in the form of living biomass, is emerging. Properly protected and promoted Antarctic blue carbon will form the world's largest natural negative feedback on climate change. However, fulfilling this promise may be challenging, given the uniqueness of the region and the legal systems that govern it. In this interdisciplinary study, we explain: the global significance of Antarctic blue carbon to international carbon mitigation efforts; the urgent need for international legal protections for areas where it is emerging; and the hurdles that need to be overcome to realize those goals. In order to progress conservation efforts past political blockages we recommend the development of an inter-instrument governance framework that quantifies the sequestration value of Antarctic blue carbon for attribution to states' climate mitigation commitments under the 2015 Paris Agreement.

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“…While carbon pricing and carbon accounting methodologies are constrained by estimation based accounting frameworks, carbon trading platforms and pricing initiatives are rapidly expanding (e.g., 45 national, 25 subnational jurisdictions 124 ) emphasizing the importance of shared methodology for forest carbon sequestration product offerings for expanding trading platforms. Although it is not clear how REDD+ will be integrated within the Paris Agreement (e.g., Article 6) 125 or into existing compliance markets 126 , improved quantification of forest carbon sequestration links these entities and mechanisms together in a harmonized universal science-based transactional framework. For example, forest carbon offsets sourced in China are verified and traded as equivalent to those originating from Africa, the United States, Canada, Mexico and other national and sub-national platforms, potentially improving market liquidity and reducing costs of compliance 127 .…”

Section: Co 2 Forestmentioning

confidence: 99%

California air resources board forest carbon protocol invalidates offsets

Marino

Mincheva

Doucett

2019

Preprint

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The commercial asset value of sequestered forest carbon is based on protocols employed globally, however, their scientific basis has not been validated. We review and analyze commercial forest carbon protocols and offsets, claimed to have reduced net greenhouse gas emissions, issued by the California Air Resources Board and validated by the Climate Action Reserve (CARB-CAR). CARB-CAR protocol annual offsets, resulting from forest mensuration and growth simulation models, are compared with a population of forest field sites for which annual net ecosystem exchange (NEE) of carbon was measured directly as flux by CO2 eddy covariance, a meteorologically based method integrating forest carbon pools. We characterize differences between the protocols by testing the null hypothesis that the CARB-CAR commercial annual offset data fall within the boundaries of directly measured forest carbon NEE; gC m-2yr-1 are compared for both datasets. Irrespective of geographic location and project type, the CARB-CAR population annual mean value is significantly different from the NEE population mean at the 95% confidence interval, rejecting the null hypothesis. The CARB-CAR population exhibits standard deviation ~5x that of the NEE natural ranges; the variance exceeds the 5% compliance limit for invalidation of CARB-CAR offsets. Exclusion of the soil carbon pool typical for CARB-CAR net carbon budgets pose insuperable carbon accounting uncertainty for offsets that extend to vendor platforms and policies including the United Nations Program on Reducing Emissions from Deforestation and Forest Degradation and the Paris Agreement. NEE methodology for commercial forest carbon offsets ensures in situ molecular specificity, verification of claims for net carbon balance, performance-based pricing and harmonization of carbon protocols for voluntary and compliance markets worldwide, in contrast to continuing uncertainty posed by traditional estimation-based forest carbon protocols.

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Environmental integrity of international carbon market mechanisms under the Paris Agreement

Cited by 109 publications

References 53 publications

A Novel Extended Higher-Order Moment Multi-Factor Framework for Forecasting the Carbon Price: Testing on the Multilayer Long Short-Term Memory Network

A Novel Extended Higher-Order Moment Multi-Factor Framework for Forecasting the Carbon Price: Testing on the Multilayer Long Short-Term Memory Network

Protecting Antarctic blue carbon: as marine ice retreats can the law fill the gap?

California air resources board forest carbon protocol invalidates offsets

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