Estimating the potential of international carbon markets to increase global climate ambition

• DOI: 10.1016/j.worlddev.2023.106257
• Publication Date: 2023-04-06T17:10:18Z
• Authors: Pedro Piris-Cabezas; Ruben N. Lubowski; Gabriela Leslie
• Keywords: Carbon credit; Carbon price; Deforestation

By helping achieve emissions targets more inexpensively than expected, trading systems can lower political resistance to ambitious targets, enabling deeper and faster cuts in over time. Using a dynamic global partial-equilibrium carbon market model, we quantify cost savings under scenarios for within across countries, as well the corresponding potential escalate reductions if those were translated into greater mitigation. We find use of markets could allow world nearly double climate ambition relative current Paris pledges (NDCs) 2020–2035, without increasing total costs compared base case international markets. Significant enhance remain where participation is limited using "heat map" analysis countries' readiness, with policy uncertainty that delays investments. also since protecting tropical forests offers so much low-cost mitigation potential, linking reduced deforestation an drives majority gains modeled scenarios. International markets, including deforestation, play potentially even critical role increases, roughly volume ten-fold value transactions scale up limit warming 2°C. Under this scenario, lowers by two thirds, one third same gain sufficient keep options open limiting 1.5°C. High-integrity approaches cooperation—as envisioned Article 6 Agreement inclusion priority—thus merit significant attention means closing gap.