The Sound of Economics How can carbon credits work better?
Nov 19, 2025
Join Georg Zachmann, a Bruegel economist focused on energy transition, and Jos Delbeke, former Director General of the European Commission's climate division, as they explore innovative solutions for carbon credits. Zachmann proposes using EU targets to create a global carbon buyers club, while Delbeke emphasizes enhancing the EU Emissions Trading System without direct foreign credits. They discuss the governance challenges, the role of the private sector in maintaining reputation, and advocate for proactive European leadership in global climate efforts.
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EU's Past Credit Flood Almost Broke ETS
- The EU once flooded its ETS with low-quality Kyoto credits and then closed the door to restore price integrity.
- Jos Delbeke warns that past openness crushed prices and damaged the system's credibility.
Buy Into NDCs, Not Individual Projects
- Georg Zachmann proposes using limited international flexibility to buy mitigation tied to other countries' NDCs rather than dubious standalone projects.
- He suggests leveraging purchases (e.g., buy more foreign mitigation per EU ton) to increase global impact and credibility.
A Carbon Central Bank To Set Exchange Rates
- Zachmann suggests a carbon 'central bank' to hold foreign units and develop an exchange rate against EU allowances.
- Market participants would discover relative values, and the bank would allow final physical exchanges later.