Sectoral Market Mechanisms

The CSI has been advocating that a sector-based approach to climate mitigation can effectively enhance a large-scale response to climate change. In 2009, we published the results of a modeling exercise, in which we showed the potential for large greenhouse gas emissions reductions in the cement industry worldwide through the adoption of a sectoral policy approach. (Click here to view the modeling results.)

The CSI considers sectoral market mechanisms as the most effective and efficient tool, as they can build on national priorities and leverage existing emissions reduction efforts, while rewarding emissions reduction efforts with tradable credits. While ultimately a global climate agreement needs to be put in place, the CSI recognizes that large-scale emissions abatement activities can start at regional and/or country level.

To be successful, sectoral market mechanisms need to be based on a consistent measurement, reporting and verification (MRV) system so that a later linking to a global market is possible. MRV standards should be globally harmonized, or for the least be compatible and comparable, as diverging standards would lead to concerns over the environmental quality of credits The United Nations Framework Convention on Climate Change (UNFCCC) has a role to play in developing this global MRV system. 

To view the Sectoral Market Mechanism brochure, please click here.

To view the Sectoral Market Mechanism presentation, please click here.

A sectoral market mechanism consists of emissions reductions goals jointly set by governments and companies for industry sectors. It is applied at regional or national level and includes sectoral emissions reduction targets, rewarded by tradable credits provided that emissions are reduced below agreed benchmarks.

To implement a sectoral market mechanism, a database is needed to collect accurate and verifiable information on CO2 and energy performance of industrial installations at sector level. On this basis, sectoral performance metrics can be developed, expressed as an improvement objective towards a business-as-usual trajectory. While the performance metrics should ideally be the same globally, the values attributed to performance improvements can be set nationally / regionally, in accordance with the technical and economic capabilities of a country or region.

The CSI is willing and able to work with governments to elaborate practical aspects of a suitable sector participation scheme and appropriate carbon commitments. It has developed a number of tools that can support action:

• a common MRV methodology (“The Cement CO2 and Energy Protocol”), used today by the majority of the global cement industry
• a global database on CO₂ and energy performance for the sector (“Getting the Numbers Right”), to allow analysis and benchmarking of industry performance. It represents the world's best data available for any one sector, with close to 80% of data independently verified.
• a global technology roadmap for the cement sector until 2050, assessing the technical feasibility of the various levers for emissions reductions in cement production. This work was developed together with IEA and is currently being replicated in India.

Sectoral Market Mechanism presentation

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