VoxDev Development Economics S6 Ep50: A unified global carbon market
Dec 17, 2025
In this engaging discussion, economists Robin Burgess from LSE and Rohini Pande from Yale dive into the concept of a unified global carbon market. They explore how integrating compliance and voluntary markets can enhance credibility and efficiency in carbon trading. The duo highlights successful models like the EU ETS and discusses the need for standardized regulations to build trust. They also examine how this unified system can shift funds to low-income countries, accelerate clean energy adoption, and unlock significant investments for sustainable growth.
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Why Compliance Markets Matter
- Compliance carbon markets cap total emissions and let firms trade permits to reach that cap cost-effectively.
- The EU ETS offers strong evidence that trading reduces emissions substantially over time.
Voluntary Market Fragility
- Voluntary carbon markets lack a binding cap, standardization, and transparency which undermines credibility.
- That fragmentation causes varying prices and occasional market crashes when trust evaporates.
Jurisdictional Entry Scales Impact
- A unified market would treat jurisdictions as full participants, standardizing permits across renewables, nature-based projects, and industry.
- Standardization and jurisdictional entry increase scale and credibility needed to bend global emissions.