IIF Authors

Status: Will be live at 10/26/2021 05:57

Getting to Net-Zero: The Vital Role of Global Carbon Markets

Carbon markets are expanding rapidly, as governments, companies and financial institutions increasingly commit to achieving net-zero greenhouse gas (GHG) emissions targets. Over 70% of global economic activity occurs in countries with net-zero emissions targets. Many of these countries use compliance carbon markets (“compliance markets”), which now cover 21% of global emissions, up from 11% in 2015. Beyond the jurisdictional level, companies are increasingly committing to net-zero emissions, by reducing direct and supply-chain emissions where feasible, and neutralizing for residual emissions with emissions removals and storage, through the purchase of high-quality carbon credits through voluntary carbon markets (“voluntary markets”), which operate in parallel to compliance schemes.

This report examines the growth of global carbon markets, focusing on interactions between compliance and voluntary markets, and highlights implications for businesses, financial institutions, and policymakers. It sets out how the unlocking complementarities between compliance and voluntary markets could support greater climate ambition, and the implications of this evolution for firms seeking to navigate the carbon markets landscape.