Scientists, policymakers and others do agree on one thing: while companies should focus primarily on reducing their emissions, many are unlikely to eliminate them entirely for years to come – which leaves carbon markets an essential role.
“The voluntary carbon markets are by no means the primary means of reducing or removing greenhouse gas emissions,” says Annette Nazareth, who chairs the Integrity Council for the Voluntary Carbon Market, which is developing standards for carbon credits. “But they can be a meaningful complementary tool in getting to our net zero goals.”
“There are really good reasons for having carbon markets,” says Bruce Usher, author of Investing in the Era of Climate Change. “The problem is that implementing them is extraordinarily difficult to do in a way that actually reduces emissions.”
The idea behind carbon trading is simple. Because reduction or removal in one area affects atmospheric levels globally, it can be sold in the form of offsets or allowances.
To reduce greenhouse gas levels, governments must tighten caps on emissions and increase the number of industries covered by the rules. However, they must also avoid “leakage” – companies shifting production to places where emissions control is not mandated.
https://www.ft.com/content/5349cb46-4c33-4a2e-840a-b8fc94de7254