Lately, there was rising curiosity in establishing regional carbon markets to reinforce the effectivity of carbon buying and selling and promote collaboration amongst neighbouring nations. By establishing regional carbon markets, nations can harmonise carbon pricing mechanisms, share finest practices, and coordinate emissions discount efforts extra successfully.
Furthermore, regional carbon markets present alternatives for nations to leverage their collective strengths and assets to realize higher emissions reductions. By working collectively to develop and implement joint emissions discount initiatives, nations can obtain economies of scale and drive down the price of mitigation efforts.
Regional carbon markets function buying and selling programs permitting corporations and people to offset their greenhouse gasoline emissions by buying credit from entities that scale back emissions. These credit are traded on each compliance and voluntary markets. Compliance markets, pushed by regulatory necessities, embrace emissions buying and selling programs just like the European Union’s ETS and China’s ETS.
Voluntary markets, however, facilitate buying and selling primarily based on voluntary participation. The rise in carbon markets is spurred by the pressing have to fight local weather change, highlighted by the IPCC’s report on escalating emissions and the upcoming dangers of exceeding 2°C warming. These markets, integral to reaching Nationally Decided Contributions (NDCs) beneath the Paris Settlement, allow nations to finance local weather motion and assist adaptation efforts.
Nevertheless, challenges reminiscent of double-counting, human rights abuses, and greenwashing pose important hurdles that should be addressed for carbon markets to successfully drive emissions reductions and promote sustainable improvement. Main nations like Costa Rica and Ghana are strategically participating in carbon markets to satisfy their NDCs and advance local weather resilience.
