temperature increase to 1.5 degrees Celsius”. More mitigation than what was pledged through the political process so far is needed.

Can a new market mechanism help to deliver this additional mitigation, and if so how?

The last years’ negotiations on reforming CDM and JI ‐ through potential revisions of the respective modalities and procedures/guidelines – has included a discussion of the concept of “net mitigation” that could form the basis for one possible set of mechanisms, among others, to implement the requirements (i) and (ii) above.

This paper offers a deeper dive into this “net mitigation” concept, and for that reason looks once more at the existing climate policy architecture of the Kyoto Protocol and its mechanisms. The findings might be of interest for the ongoing discussion on reforming CDM and JI but also – and probably more importantly – for the new, post‐Paris, discussion on how to shape the established new mechanism and build future international markets for control of global GHG emissions.

The paper uses verbal arguments, backed up mainly by results from two analytically‐oriented papers (Strand (2013), and Rosendahl and Strand (2015)), to discuss, explain, and expand on the “own contribution” and “net atmospheric benefit” concepts presented above, with focus on global efficiency properties for the latter.

The comparison of offset discounting and baseline tightening is done with the aid of a simplified analytical model, presented in the annex of the paper, and developed for this particular purpose. Constrained efficiency of “net atmospheric benefits” for buyer countries under certain market imperfections is derived from the cited analytical work (Strand (2013) and Rosendahl and Strand (2015)), building on the equivalence of offset price and quantity discounting in the reference case (with an optimal allocation). No full modelling is however offered in the current paper.

The key findings of the paper can be grouped by the two main aims of the paper. First, I find that it is possible to achieve “net atmospheric benefits” in the short run (for given and exogenous “ambition”) through measures such as offset discounting (whereby offset buyers are credited fewer mitigation units than those delivered by hosts), and baseline tightening (implying stricter “baselines” against which offsets are credited). Of these two measures, baseline tightening is more efficient, but often more politically difficult to implement and thus for practical reasons often less applicable.

In the long run (with endogenous ambition) it is doubtful whether “net atmospheric benefits” can be achieved as the effect would most likely be counted in by policy makers setting the targets.

Achieving increasing global mitigation through “net atmospheric benefits”, using offset discounting as a mechanism, is inefficient in cases with no other major distortions (as compared to increasing ambition through the political process). The reason is that it works in a very similar way as a tax on international GHG emissions market transactions, distorting the offset market and resulting in an inefficiently low offset supply (as compared to the global least‐cost solution).

The “net atmospheric benefits” approach can still be constrained efficient for offset buyers (optimal for their economies and for given ambition level) given that certain market imperfections prevail. Two such 3