Carbon Market Governance and Environmental Policy
Summary
Carbon market governance encompasses the structures, rules and institutions that oversee the trading of greenhouse-gas emissions allowances and credits. At its core, it seeks to align economic incentives with environmental objectives by placing a price on carbon, thereby stimulating emissions reductions where they are most cost-effective. Governance frameworks range from compliance schemes—such as cap-and-trade systems at regional, national and subnational levels—to voluntary markets for offset credits. Effective environmental policy integrates these market mechanisms with regulatory standards, carbon taxes and complementary measures such as investment in low-carbon technologies, standards for additionality and safeguards against leakage and double counting. Multilateral agreements, notably under the UNFCCC, provide the legal architecture for international cooperation, including provisions for linking disparate trading schemes. Critical challenges include ensuring transparency, maintaining environmental integrity, promoting equitable access and embedding social and biodiversity safeguards. Recent advances in remote sensing, blockchain and enhanced accounting methodologies are improving the measurement, reporting and verification of emissions, bolstering confidence in market transactions and informing the design of more robust policy instruments.
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Carbon Market Governance and Environmental Policy publication trend
The graph below shows the total number of articles in carbon market governance and environmental policy across all publications each year (not limited to Nature Index journals).
Technical terms
Carbon market: A system in which emissions allowances or credits are traded to incentivise reductions in greenhouse-gas emissions.
Carbon offset: A tradable instrument representing the reduction or removal of one tonne of carbon dioxide equivalent, used to compensate for emissions elsewhere.
Net-zero: A state in which anthropogenic greenhouse-gas emissions are balanced by removals over a specified period.
Carbon budget: The cumulative amount of carbon dioxide emissions permissible to keep global temperature rise within a given threshold.
Global warming potential (GWP): A metric comparing the warming effect of different greenhouse gases relative to carbon dioxide over a defined time horizon.
References
- Disentangling the “net” from the “offset”: learning for net-zero climate policy from an analysis of “no-net-loss” in biodiversity. Frontiers in Climate (2023).
- Changing climate change: The carbon budget and the modifying-work of the IPCC. Social Studies of Science (2020).
- When you wish upon a (GWP) star: Environmental governance and the reflexive performativity of global warming metrics. Social Studies of Science (2022).
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