CARBON MARKETS 101

The document explains the difference between cap-and-trade systems and carbon credit mechanisms, detailing the evolution from the Kyoto Protocol to the Paris Agreement. It critiques carbon offsetting as a tool for greenwashing and argues for a shift toward 'climate contributions' where credits are retired without claims of neutrality.

• There is a fundamental distinction between emissions trading systems (ETS) and carbon credit mechanisms: ETS involves trading permits to pollute in the future (quotas), whereas credit mechanisms involve trading emission reductions that have already occurred in the past.
• The Clean Development Mechanism (CDM) under the Kyoto Protocol largely failed because approximately 85% of its projects would have happened without the mechanism's funding, meaning they did not provide additional climate benefits.
• Article 6.2 of the Paris Agreement allows countries to trade Internationally Transferred Mitigation Outcomes (ITMOs), but it lacks independent oversight and allows countries to keep transaction data confidential, risking the trade of low-quality credits.
• Article 6.4 of the Paris Agreement introduces 'mitigation contribution units,' which allow a host country to retain the credit toward its own climate goal after selling it, moving away from the traditional offsetting model.
• The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is criticized for only covering international flights, focusing solely on CO2 while ignoring other non-CO2 climate impacts, and relying on the flawed concept of offsetting fossil fuel emissions.
• The voluntary carbon market is dominated by private standards like Verra and Gold Standard; however, many credits—particularly from forestry and renewable energy—face risks regarding additionality and baseline accuracy.
• REDD+ mechanisms, especially those managed by private standards, are criticized for overestimating emission reductions and lacking adequate safeguards for local communities.
• The document argues that companies should replace 'carbon neutrality' claims with a 'climate contribution' approach, where they purchase and retire credits to fund climate action without claiming to offset their own emissions.

APA

Carbon Market Watch (2024). CARBON MARKETS 101. https://carbonmarketwatch.org/wp-content/uploads/2024/11/101-report-layout-carbon-markets-FR.pdf

Chicago

Carbon Market Watch. CARBON MARKETS 101. 2024. https://carbonmarketwatch.org/wp-content/uploads/2024/11/101-report-layout-carbon-markets-FR.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=CARBON MARKETS 101 |date=February 2024 |url=https://carbonmarketwatch.org/wp-content/uploads/2024/11/101-report-layout-carbon-markets-FR.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2024carbon, author = {{Carbon Market Watch}}, title = {{CARBON MARKETS 101}}, institution = {Carbon Market Watch}, year = {2024}, month = feb, url = {https://carbonmarketwatch.org/wp-content/uploads/2024/11/101-report-layout-carbon-markets-FR.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }