Tulesi Suresh

How Can Effective Policies Close Loopholes in Carbon Markets?

Started May 23, 2023

Abstract or project description

Surprisingly, 90% of offsetting credits approved by the world’s leading standard for the carbon offset market, Verra, do not genuinely represent carbon reductions (SourceMaterial et al., 2023). By buying carbon credits, companies can invest money into projects geared towards improving the future climate that would not have otherwise been funded. These carbon credits allow them to offset emissions. However, due to the unregulated nature of carbon markets worldwide, there are many loopholes and limitations. In addition, large corporations can exploit carbon markets for their personal interests or capital gain and not necessarily to reduce greenhouse gas emissions. By compiling information from various sources on carbon markets and their limitations, this paper analyzes how effective policies can be written to close existing loopholes. A summary will be presented to recommend how the carbon market could become a more reliable tool for curbing carbon emissions. In the conclusion of this paper, it is deduced that carbon market loopholes could be closed with better government regulation, increased development of clean technologies, and a more free market for carbon credit pricing.