Problem
The current carbon market faces several challenges:
Fragmentation: The carbon market is often divided into various regional or sector-specific systems, leading to inconsistencies in regulations and pricing. This can create complexities for businesses operating across different jurisdictions.
Opacity: Transparency issues plague some carbon markets. Access to accurate and up-to-date information about emissions data, offset projects, and pricing can be limited, making it challenging for participants to make informed decisions.
Inefficiency: Some carbon markets may not be as effective at driving emissions reductions due to factors like inadequate emissions caps, weak enforcement, or insufficient innovation in emissions reduction technologies.
Restricted Access: Participation in carbon markets may be limited to larger companies or specific industries, excluding smaller businesses or sectors that could contribute meaningfully to emissions reductions.
Double Counting: This occurs when the same emissions reduction is claimed and counted by multiple parties, leading to an overestimation of actual emissions reductions. This undermines the credibility and effectiveness of carbon markets.
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