Defining Non-Market Approaches

The concept of NMAs in the international sphere remains largely undefined. One starting point, as demonstrated in this paper, is to define NMAs in contrast to MBMs. However, the concept of MBMs has evolved over the years and changes in different contexts. As noted earlier, for instance, the Paris Agreement negotiations saw a movement away from the concept of mechanisms which distort the market to those which result in internationally transferable mitigation outcomes.¹⁷⁹ Accordingly, carbon taxes were perceived to be NMAs by some Parties for the purposes of the debate on NMAs.¹⁸⁰ Thus, a definition of NMAs may be approaches to climate policy which do not generate or trade internationally transferable mitigation outcomes. By contrast, submissions from Bolivia, a major proponent of NMAs, focus on approaches which avoid commodifying Mother Earth and pursue

“climate justice”.¹⁸¹

Highlighting the potential diversity of NMAs, a submission from Bolivia in 2011 listed several NMAs which they sought to include into the next agreement under the UNFCCC.

This list varied from prohibition of production of war material and war activities, global

179 FCCC/TP/2014/10, para [10].

180 Ibid, p. 5–6.

181 See i.e. FCCC/SBSTA/2013/MISC.11, p. 8-12.

education on climate change to removal of intellectual property rights for climate technology and no new coal plants.¹⁸² Evidentially, NMAs incorporate a wide variety of policies, standards, information instruments and other approaches. A UNFCCC technical paper outlines a helpful classification method for understanding the range of NMAs by sorting them into the following categories: regulations; voluntary agreements; framework targets;

information instruments; education and awareness programmes; research and development;

and economic and fiscal instruments.¹⁸³ The all-encompassing nature of climate change means that virtually every form of national policy, including transport, agriculture and land-use, has a direct or indirect impact on emissions.¹⁸⁴ However, these fall outside of the scope of this paper.

One of the most important NMAs is regulations and standards, which are particularly common in relation to technological standards and performance standards.¹⁸⁵ A frequent performance standard, for example, is a minimum energy efficiency building requirement and there are many national examples, such as the Building Energy Codes Program run by the United States’ Department of Energy.¹⁸⁶ While regulations may determine what products can exist on the market, they are imposed and monitored by government and enforced by law. Despite the government’s role in determining regulation, consultations with industry and other relevant stakeholders will often take place in an attempt to incorporate diverse perspectives.¹⁸⁷ The ability to replicate existing standards can make it easier for countries with limited funding and administrative capacity to implement and monitor.¹⁸⁸ In addition, regulations can target specific sectors with substantial options for reductions and innovation, such as the transport sector.¹⁸⁹ One such example, are supply side policy mechanisms, which have received increasing attention in recent years. Supply side policies include actions such

182 FCCC/AWGLCA/2011/MISC.3, p. 3-5.

183 FCCC/TP/2014/10, p. 4–5; see other lists outlining types of NMAs e.g., Gupta et al. 2007, p. 750;

FCCC/AWGLCA/2009/14, p. 110–112; FCCC/AWGLCA/2012/MISC.4/Add.6, p. 4.

184 Metz 2010, p. 288-289; Bodansky 2010, p. 31.

185 Gupta et al. 2007, p. 750; FCCC/TP/2014/10, p. 4-6.

186 FCCC/TP/2014/10, p. 9; Metz 2010, p. 289.

187 Metz 2010, p. 290.

188 Metz 2010, p. 291–292; Gupta et al. 2007, p. 754–75.

189 Ibid.

as the state restricting leases for the exploration, development and production of fossil fuel productions, predominately oil, coal and gas.¹⁹⁰

Voluntary agreements, information instruments and research and development are other important types of NMAs in climate change policy. Voluntary agreements constitute an agreement between private entities and the government, which operates outside of legally binding regulations.¹⁹¹ This may mean that they can extend beyond the environmental performance obliged of industry or apply to a sector which is unregulated. These are often politically popular, as they occur only between willing parties and encourage cooperative efforts between the government and industry, sometimes using incentives as encouragement.¹⁹² Their effectiveness will be influenced by a number of factors, including the relationship between government and industry and what the agreements seek to achieve.¹⁹³ Information instruments are tools aimed at transparency and increasing consumer knowledge and awareness through the disclosure of environmental information.¹⁹⁴ Significant potential lies in information instruments, as they empower a broad array of non-experts to make environmental choices, often in a cost-effective manner such as eco-labelling.¹⁹⁵ On a broader scale, information instruments may influence stock prices and public relations. For example, disclosing that a corporation conducts business in a particularly environmentally harmful manner may cause divestment to companies with better practices or stock price losses.¹⁹⁶ Information instruments are noted within Article 6 of the UNFCCC, which promotes taking action to inter alia increase climate change education, public awareness and public access to relevant information.¹⁹⁷ The final non-market policy category, research and development, involves direct funding being provided by government authorities to generate innovation in climate change mitigation and adaptation solutions.¹⁹⁸ While such measures may often rely on national funding, research

190 Lazarus and van Asselt 2018, p. 6–8; SEI et al. 2019.

191 Gupta et al. 2007, p. 750; Metz 2010, p. 288–289.

192 Gupta et al. 2007, p. 747; 759–760.

193 Metz 2010, p. 296–298.

194 Gupta et al. 2007, p. 750; Metz 2010, p. 288–289.

195 Driesen 2012, p. 216–217.

196 Gupta et al. 2007, p. 765.

197 Ibid, p. 764–765.

198 Gupta et al. 2007, p. 750; Metz 2010, p. 288–289.

and development provides vital opportunities for international collaboration, including increasing access to environmentally beneficial technology and findings, developing or strengthening diplomatic relationships and reducing the associated costs.¹⁹⁹ This is particularly fundamental for developing countries, to enable access to cost-effective sustainable development while avoiding high emission pathways.²⁰⁰

Several economic and fiscal instruments operate in a grey area, given the wavering definition between market and non-market mechanisms. Some of these mechanisms have been previously discussed in earlier sections. However, entities such as the GCF have potential to provide developing countries access to non-market sources of funding. Similarly, Party submissions regarding NMAs noted that avenues for non-market funding was also being discussed in relation to reducing emissions from deforestation and forest degradation (REDD+) and forest bonds.²⁰¹ Other forms of NMAs have been loosely incorporated into the international climate change agreements, but lack the rules and weight provided to MBMs. For example, Article 2 of the Kyoto Protocol outlines an open-ended list of policies including protection of carbon sinks, energy efficiency promotion and research and development in carbon sequestration which could involve NMAs.²⁰² These are all voluntary and countries may choose to implement them “in accordance with [their] national circumstances”.²⁰³ However, a recent push has resulted in NMAs being more firmly anchored in the Paris Agreement.

3.3 Return of the Non-Market Approaches