Nationally Appropriate Mitigation Actions (NAMAs) and carbon markets are currently developing in parallel with increasing debate on how to link the two approaches. This paper explores the role carbon markets may play for NAMAs and the key issues around the compatibility of the two concepts. It reviews the discussions on them at the international policy level and looks at actual NAMA developments on the ground in the light of compatibility with carbon markets.The paper highlights the following on the emerging NAMA policy architecture:
the concept of NAMAs has been evolving since the adoption of the Bali Action Plan which created it in 2007
international negotiations have differentiated internationally supported NAMAs from domestically supported NAMAs, although a definition of NAMA does not exist at the international policy level
different NAMA typologies are emerging based on different activities and scopes
NAMAs are country driven and require some form of government backing.
On the new market mechanism and NAMAs, the paper includes the following findings.
The new concept of credited NAMA is linked to the new market based mechanisms, although it is not yet recognised in official documents.
Carbon market based approaches require stringent greenhouse gas (GHG) accounting and standards for environmental integrity.
Developing NAMAs through clean development mechanism (CDM) methodologies could lead to the exclusion of certain sectors and failure to achieve a long-term transformation of economies.
Well designed NAMAs, which channel public funds into reducing private sector risk, may result in private sector investment at a much larger scale than what carbon market mechanisms may achieve.
Carbon markets have a role to play in NAMA finance in certain cases, but the issues of double counting and funding must be resolved.
The paper concludes that workable concepts and structures for NAMA finance are still in their infancy and knowledge will need to be drawn from the extensive finance experience of both the private and public sector.