Supporting energy pricing reform and carbon pricing policies through crediting

Some work has been done on regulatory policies (such as energy-efficiency standards, including under the Clean Development Mechanism [CDM] and with an aim to reforming the CDM beyond a project-level scope) both from the methodological side and through blueprinting of operational models. Similar approaches were developed for policies such as feed-in tariffs for renewable energy. The potential crediting of implicit or explicit carbon pricing policies is uncharted territory. Anecdotally, the CDM played a major role in building capacity, awareness and interest in many countries to implement domestic carbon pricing schemes to provide their economies with a price signal. Crediting of carbon pricing policies might be a way to support countries further and on a higher scale in these efforts. It might also be possible to achieve much larger emission reductions and international carbon flows in crediting such policies than what CDM and Joint implementation (JI) have achieved. This study examines the role that policy crediting might play in increasing the mitigation impact of energy pricing reform and carbon pricing policies (pricing reform). This can either be through: A policy being implemented that would not have been without crediting; or An existing policy or one that has been decided upon is made more stringent (i.e., that its mitigation impact is increased).