Carbon Market Toolkit: Building trust and transparency for a net-zero emissions world

Gaming the global carbon market rules: Findings from a network analysis of credit flows shows that weaknesses were exploited

Result

Key data

Result

The project showed that "hot air"certificates (Emission Reduction Units) from Ukraine and Russia flowed into the global carbon market through a small number of central, unregulated intermediaries (mainly Swiss commodity traders and UK financial institutions), where they were used by companies and countries to meet their climate targets.

This reveals a principal-agent problem and critical vulnerabilities in the global carbon market, and concludes that greater transparency and market oversight are needed to prevent this in future carbon markets under the Paris Agreement (Article 6).

Description

Glogbal carbon markets are key to achieve climate goals but complex and fragmented across jurisdictions. The project builds a large, homogenized dataset from various national registries to identify loopholes and rule-gaming.

On this pases we are providing market designers on how the markets can digital technologies potential for greater market transparency.