Tightening Voluntary Carbon Markets to Drive Up Costs

Fri 15 Oct, 2021

Persistently low prices and historical oversupply of carbon offset credits have limited the types of projects that can be financed, with much of today’s trade linked to renewable energy projects in China and India. Increasing competition for more expensive land use and forestry-related credits, coupled with initiatives to set stronger standards for offset projects, are likely to translate into higher offsetting costs. A two-tier system of low-cost/low-quality and high-cost/high-quality offsets is the most likely outcome in the absence of a global agreement on international emissions trading.

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