Carbon Markets And Their Implications For Domestic Policies And Institutions
UN Trade and Development (UNCTAD)
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Abstract: This chapter of the LDC Report 2024 explores the institutional requirements for implementing Paris Agreement Article 6 mechanisms in Least Developed Countries (LDCs), including Kenya. It reviews ITMOs, the Article 6.4 crediting platform, and non-market approaches tied to finance, tech transfer, and capacity building. The report presents a comparative analysis of designated national authorities and legal structures across 23 LDCs, highlighting Kenya?s leadership in registry design and sectoral legislation. Examples from Uruguay, South Africa, and Mexico provide lessons on emissions benchmarks, revenue recycling, and carbon pricing. The paper recommends flexible legislation, inter-ministerial coordination, and phased rollout of infrastructure and registry systems. It advocates legal harmonization between voluntary and compliance markets and stakeholder alignment for effective climate finance access. Institutional readiness and governance clarity are emphasized as prerequisites for durable carbon market participation.