How to deal with macroeconomic imbalances? CEPS Special Report No. 69, 23 November 2012

Lax financial conditions can foster credit booms. The global credit boom of the last decade led to large capital flows across the world, including large movements of resources from the northern countries of the euro area towards the southern part. Since the start of the crisis and more markedly after 2009, these flows have suddenly stopped, creating severe adjustment pressure. At this point the common monetary policy can only try to mitigate the unavoidable adjustment by maintaining overall financial stability. The challenge is to strike a delicate balance between providing liquidity for solvent institutions while keeping the overall pressure on for a rapid correction of the imbalances.

A Framework for Various Approaches under the UNFCCC: Necessity or luxury? CEPS Special Report No. 70, 20 November 2012

In recognition that the world is moving towards a new climate change regime that in many ways will be very different from the world in which the Kyoto Protocol has been operating, climate negotiators and other specialists have begun to focus their attention on developing a “framework for variable approaches” (FVA). It is hoped that this new framework will prove more adaptable to national circumstances and more capable of catalysing new ideas, at the regional, national or sub-national level. This paper examines the assumptions, objectives, scope, components and functions of an FVA, with a view to creating the right conditions in which a well-functioning global carbon market can emerge.

The Future of the Clean Development Mechanism. Note on the report “A Call to Action” of the High-Level Panel on CDM Policy Dialogue. CEPS Special Report No. 71, 20 November 2012

The clean development mechanism (CDM) has been through a long and complex growing process since it was approved as part of the Kyoto Protocol. It was designed within the framework of the UNFCCC and the Kyoto Protocol, and reflected the political and economic realities of that time. To ensure its continued effectiveness in contributing to future global climate action and to reflect on how best to position the CDM to respond to future challenges, a high-level panel (HLP) was formed at the Durban climate change conference in 2011. Following extensive consultations, the panel published its report in September 2012. Through this Special Report, the CEPS Carbon Market Forum offers its reflections on findings and recommendations of the HLP, as well as, by extension, its own views on the future of the CDM. In the context of the latter, it explores the following questions: Is there a need for an instrument such as the CDM in the future? What ‘demand’ can it fill? In the roles identified under the first question, what can be done to adapt it and also continue to increase its efficacy?

Backloading: A necessary, but not sufficient first step. CEPS Special Report No. 72, 20 November 2012

In July 2012, the European Commission issued an invitation for public consultation to review the ‘auctioning time profile’ for the EU Emissions Trading Scheme” in order to collect views from stakeholders and experts in the field of the EU carbon market on a draft for a future amendment of the Commission Regulation on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances. In this submission, the CEPS Carbon Market Forum addresses the following questions and offers its views on the Commission’s proposed amendments: Is back loading a good idea? Is there a need for following up the back loading with structural measures? What should the number be? If this cannot be addressed, what are the considerations for deciding upon that number? What price expectations are linked to the number? On what basis are they construed?