Carbon Market Opportunities in Southern Mediterranean Countries

Abstract

To date, Southern Mediterranean countries have hosted a limited number of projects under the Clean Development Mechanism (CDM). There are three challenges to the participation of middle-income countries in future carbon markets: the limited size of future demand for offsets or credits; restrictions on the use of CDM credits in Phase III of the EU Emissions Trading Scheme; and the lack of prompt preparation for the start of new market-based mechanisms. This study examines existing and emerging activities in Southern Mediterranean countries that could fit into new market-based mechanisms. It explores options for the evolution of mechanisms and discusses the merits of post-2012 carbon funds in bridging the gap between the end of the first commitment period of the Kyoto Protocol and the entry into force of a new international agreement.

Keywords: Southern Mediterranean, EU, EU emissions trading scheme, clean development mechanism, CDM, Kyoto Protocol, carbon market