Carbon Markets – Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development

This briefing note by the Forum on Trade, Environment, & the SDGs (TESS) examines the expansion and dynamics of global carbon markets, categorizing them into compliance-based, voluntary, and multilateral systems under Article 6 of the Paris Agreement. It analyzes the trade implications of these markets, including competitiveness concerns and the use of mechanisms like the EU's Carbon Border Adjustment Mechanism (CBAM), while highlighting the specific opportunities and financial challenges facing developing countries in adopting these tools.

• Carbon pricing systems are expanding globally, with over 100 countries including carbon markets in their first set of nationally determined contributions (NDCs). As of 2023, there are 75 carbon pricing systems in use, consisting of 50 national or jurisdiction-wide systems and 39 sub-federal systems. Mandatory or government-led markets generated record revenues of $104 billion in 2023.
• Compliance-based carbon markets generally split into carbon taxes, which offer price certainty but less quantity certainty, and emissions trading systems (ETS), which provide quantity certainty but volatile prices. For example, Canada's carbon price is set to reach $170/tCO2e by 2030, while the EU ETS saw prices swing from nearly €100/tonne in early 2023 to approximately €70/tonne in early 2024.

APA

Vaughan, S. (2024). Carbon Markets – Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development. Forum on Trade, Environment, & the SDGs. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Carbon-Markets-Net-Zero.pdf?dm=1729155973

Chicago

Vaughan, Scott. Carbon Markets – Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development. Forum on Trade, Environment, & the SDGs, 2024. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Carbon-Markets-Net-Zero.pdf?dm=1729155973.

Wikipedia

{{cite report |last1=Vaughan |first1=Scott |title=Carbon Markets – Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development |publisher=Forum on Trade, Environment, & the SDGs |date=October 2024 |url=https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Carbon-Markets-Net-Zero.pdf?dm=1729155973 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vaughan2024carbon, author = {Vaughan, Scott}, title = {{Carbon Markets – Trade, Climate, and Net Zero Pathways: Scenarios and Implications for Developing Countries and Climate-Resilient Development}}, institution = {Forum on Trade, Environment, \& the SDGs}, year = {2024}, month = oct, url = {https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-Briefing-Note-Carbon-Markets-Net-Zero.pdf?dm=1729155973}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }