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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Simulate Before Setting Caps
- Use a model to test how country participation, abatement cost differences, and cap tightness change outcomes before setting targets.
- Design caps and rollout pace realistically to balance ambition and feasibility.
Make Permits The Core Unit
- Require permits as a single tradable unit under a binding cap to ensure the market actually reduces total emissions.
- Avoid treating nature-based or renewable credits as unbounded offsets that inflate allowed emissions.
Use Opt-In With Strong Rules
- Let any political jurisdiction opt in but require adherence to standardized rules and a global cap once they join.
- Use opt-in to build political buy-in while preserving market integrity through common rules.