Designing New Climate Regime: An Integrated Solution with Mitigation and Finance Mechanisms

A new climate regime is expected after 2020. At COP17 in 2011, Parties of UNFCCC agreed to launch a new process, called Ad Hoc Working Group on the Durban Platform (ADP), to negotiate a new agreement by 2015. The most distinguishable feature of the expecting new agreement is that it will be "applicable to all" Parties. Although "applicable to all" does not imply applicable to all in a symmetrical fashion, the Parties' positions on legal form will not fall along developed and developing country lines any more. This critical change puts one more dimension on the challenges the Parties face: the reduction gap and the financial gap. Yet it is not certain whether this dimension will be a restriction or a chance to find out a solution. It is clear, however, that we need to expand the size of the set for problem solving approaches. That is, it is time to consider another aspect we have not thought of so far. For this purpose, this article begins from operating mechanisms under the UNFCCC as building blocks of the new regime. We argue that it has been neglecting the aspect of integrating market mechanism and financial mechanism in the design process. Before Durban, after Bali, most of negotiation efforts were spent on individual issues (namely, mitigation, adaptation, finance, technology) separately. Finishing LCA and establishing ADP may provide a much more favorable environment to discuss issues in an integrated way. The aim of this research is to shed a light on the importance of "integrated mechanism" and to lay out some theoretical and logical foundations that may help to design key mechanisms in a more integrated way. The remaining structure of this article is organized as follows. First, we look at some backgrounds and at the main issues in each operating mechanism in section 2. In section 3, a rigorous analysis is followed to show what difficulties the "old" approach face and to discuss what is needed to overcome them. Section 4 provides a concept how mechanisms for mitigation and finance are interdependent. And then, we provide several policy suggestions.