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Exploring governments’ efforts to shape carbon credit markets: Possible actions to enhance integrity

Author

Listed:
  • Klas Wetterberg
  • Elisa Lanzi
  • Natali Gómez

Abstract

Carbon credit markets are a tool that can support greenhouse gas mitigation. However, to effectively support climate action, they must operate with environmental integrity. In the last decade, government influence receded in carbon credit markets, but several governments are now exploring how to increase their engagement with such markets. This paper explores governments’ efforts to shape carbon credit markets, with a focus on opportunities to enhance integrity. The paper highlights that governments can play an important role in enhancing environmental integrity, by promoting carbon credit quality improvements and clarifying the conditions under which credits can be used. For instance, governments could support ambitious quality standards or encourage the responsible use of carbon credits. To enhance integrity, governments can leverage new frameworks, notably provisions under Article 6 of the Paris Agreement. Governments can promote harmonisation to prevent integrity framework differences from negatively impacting carbon credit markets.

Suggested Citation

  • Klas Wetterberg & Elisa Lanzi & Natali Gómez, 2025. "Exploring governments’ efforts to shape carbon credit markets: Possible actions to enhance integrity," OECD Environment Working Papers 263, OECD Publishing.
    • Handle: RePEc:oec:envaaa:263-en
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    More about this item

    Keywords

    Article 6; carbon credits; climate change; compliance carbon market; crediting mechanisms; demand; environmental integrity; greenhouse gas emissions; mitigation; net zero; Paris Agreement; standards; supply; voluntary carbon market;
    All these keywords.

    JEL classification:

    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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