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We assess the development of informality in international climate policy on two levels: Whether informal organizations meaningfully contribute to climate change mitigation, and what role informality plays under the UN Framework Convention on Climate Change (UNFCCC). Proliferation of informal intergovernmental organizations (IIGOs) has enabled the move from a rigid list of countries with and without commitments, to the Paris Agreement, under which each country contributes to mitigation. Within the UNFCCC process, we find a “formality-informality cycle,” in which actors sometimes render rules and procedures more flexible and hence more efficient, only to suddenly reverse this trend at other times. Such a high-profile reversal occurred in Copenhagen in 2009. Subsequently, through the use of highly transparent negotiation procedures, trust in informality increased again, allowing negotiators to successfully override Nicaragua’s opposition in Paris in 2015. Similar formality-informality cycles can be observed on specific topics within the UNFCCC negotiations, such as international market mechanisms.

Using a dynamic version of the principal–agent model this chapter develops a theoretical framework for an international bureaucracy’s influence on the delegation of responsibilities by the organization’s member states. It argues that this influence is reinforced by external resource flows that both directly and indirectly strengthen the role of the bureaucracy. The chapter uses the case of the United Nations Framework Convention on Climate Change to test the hypotheses since its major resource flows have been driven solely by a private market for emissions credits, the Clean Development Mechanism (CDM). Between 2006 and 2013 when CDM revenues formed a significant share of the secretariat’s budget, rule-setting was increasingly dominated by the secretariat. When the crash of prices for CDM credits from 2012 onward reduced the secretariat’s revenues and projects to assess, secretariat-led rule-setting intensified. This approach was used to “buy time” in which secretariat leaders were hoping for a recovery of the CDM market. But when this recovery did not materialize, the secretariat started to lay off support staff and implicitly tried to reorient CDM resources for support of the Paris Agreement negotiations and implementation of national mitigation action.

International carbon markets are potentially a very powerful tool for mobilizing carbon dioxide removal in line with Paris Agreement ambitions to limit global warming to well below 2°C. This requires reaching global net-zero emissions between 2050 and 2070. Yet, carbon market regulators have not approached removals in a systematic manner. This review assesses the highly fragmented treatment of removals under compliance and voluntary carbon markets, including baseline, credit and cap-and-trade systems. The Kyoto mechanisms and the large voluntary carbon market standards have long focussed on biological removals without inherent storage permanence and only recently started to develop methodologies for removals with geological storage, mineralization or biochar. Driven by high prices for credits from emerging removal technologies and advance market commitment initiatives targeting high permanence removals, various newcomers in voluntary markets are currently establishing their own approaches for generating removal credits. However, they disregard key concepts safeguarding market quality such as additionality, which risks triggering scandals and tainting the entire market for removal credits. Given the diversity of credit prices spanning three orders of magnitude from 1 to 1000, as well as of volumes ranging from a few hundred to tens of millions of credits, the current “gold rush” atmosphere of removal markets needs to quickly be replaced by a coordinated approach, ensuring credibility, and enabling removals to play the required role in reaching global net zero.

The Paris Agreement reaffirmed the commitment to provide USD 100 billion in international climate finance to developing countries by 2020. This Working Paper delves into the history and challenges of international climate finance. We emphasize the complexities tied to diverse definitions and accounting practices, leading to disputes over climate finance figures, as well as the struggle of developed countries to meet the USD 100 billion annual target. With the need to mobilize finance for addressing loss and damage (L&D) gaining traction in UN climate negotiations, we examine how similar challenges may hinder progress on the L&D agenda. Furthermore, we stress the importance of fostering trust between donor and recipient countries in the context of financial support pledges under the Paris Agreement. We identify how key negotiation processes, like the New Collective Quantified Goal on Climate Finance (NCGG), have the potential to change the status quo.

The EU’s Carbon Border Adjustment Mechanism (CBAM) is evolving rapidly, with many uncertainties remaining regarding its long-term scope, embedded emissions calculation, and reactions of EU-trade partners. In its current form, the CBAM can affect Vietnamese enterprises exporting to EU although its direct impacts on Vietnam’s GDP are unlikely significant. If the CBAM is expanded to other trade-intensive sectors of Vietnam or taken up by other key trading partners of Vietnam, the impacts may grow quickly. Therefore, Vietnam should engage proactively with the CBAM and prepare for mitigation of potential impacts. One of the pro-active approaches is to accelerate and deepen the adoption of carbon pricing. This will facilitate energy transition, support achievement of Vietnam’s climate change mitigation target (NDC) under the Paris Agreement and long-term net-zero targets and would allow to harness co-benefits. It is also advisable for Vietnam to engage in constructive dialogues with the EU in order to negotiate a fair implementation of CBAM that takes into account Vietnam’s efforts. A key demand here should be the use of emissions credits instead of having to buy CBAM certificates.