Carbon markets can aid climate targets despite challenges: Report

It highlights three scenarios with varying degrees of global collaboration

- Cheryl Tan Correspondent

The international trade in carbon credits has been plagued with many uncertainties, but carbon markets should not be written off, a new report has suggested.

Despite the challenges, carbon markets are likely to continue to play a role in helping countries reduce their planet-warming emissions to meet their climate change targets, the report published on April 12 by Temasek-backed firm GenZero concluded.

GenZero chief executive Frederick Teo said that for carbon markets to take off, players need greater clarity on the factors that are shaping the market trajectory.

"The (report) explores the underlying drivers that could shape the trajectory of carbon markets.

"We hope the insights are useful in encouraging discussion around key actions that can develop a more effective carbon market to support global decarbonisation," he added.

The carbon markets facilitate international collaborations in climate action, as large emitters of planet-warming greenhouse gas emissions can purchase carbon credits generated elsewhere to offset their emissions.

One carbon credit represents one tonne of carbon dioxide (CO2) - the main greenhouse gas driving global warming - that is either prevented from being released into or removed from the atmosphere.

Projects that supply carbon credits can include a forest protection effort, or the use of technology to suck away planet-warming CO2 from the atmosphere.

However, recent developments have suggested that such crossborder collaborations could be hindered by national policies or concerns over the quality of carbon credits.

GenZero's Carbon Scenarios report highlighted three scenarios, each with varying degrees of international collaboration, that show that carbon markets will still have a role in all three outcomes.