![]() The voluntary market could pay farmers to adopt practices that sequester more carbon or otherwise reduce CO 2 or methane emissions. The government may exempt some sectors, such as agriculture, from the regulations even though farms account for 11 percent of greenhouse gas emissions. The voluntary market could fund these technologies. For example, regulations may overlook some technologies, such as more energy-efficient combustion engines or more energy-efficient air cooling and heating equipment, that help reduce greenhouse gas emissions. The potential beauty of voluntary carbon markets is that they can identify and fund low-cost mitigation actions that government regulation and taxes will miss. A large fraction of the carbon stored in these forests can be used as carbon credits. The carbon credits pay selected conservation groups across the country and Alaskan Native Americans to conserve their forests. Companies that find it too expensive to make all of their required emissions reductions under the cap-and-trade program can buy carbon credits instead. A prominent example of a carbon offset market is the timber offset program of the California Air Resources Board, which was created in 2006 as part of the cap-and-trade program for greenhouse gas emissions in California. Offset markets, in contrast, allow companies that must reduce emissions under a regulation to pay other firms to do the mitigation instead. Voluntary markets collect payments from private donors, companies, foundations, and potentially even countries, and then pay emitters to reduce their CO 2 emissions.The Chicago Board of Trade established a carbon market from 2003 to 2010, and the Task Force on Scaling Voluntary Carbon Markets, a private sector initiative, hopes to establish a large future voluntary carbon credit market. The Glasgow agreement encouraged voluntary carbon markets to operate in developing countries so that private entities could immediately support emissions reductions there, but it remains to be seen whether these markets will in fact help reduce emissions or whether the markets will turn out to be just greenwashing. One potential solution is to pay for these missed opportunities through voluntary and offset carbon markets. That means some low-cost mitigation opportunities - such as replacing coal-fired power plants with natural gas facilities, funding transmission lines to renewable energy sites, or letting trees grow for longer periods before cutting in managed forests - will invariably be missed by government rules and regulations. But most governments are reluctant to regulate or tax all emitters, such as power plants, electric companies, or forest managers. Ideally, governments should reduce emissions with carbon taxes and efficient regulations. The United States is grappling with this very issue as it seeks passage of the Build Back Better initiative, with its ambitious goals to slow climate change. Recognizing there are many political constraints that will make it difficult for countries to adopt policies that cut greenhouse gas emissions across the board, the agreement allows each nation to design its own individual national commitment. In the wake of the Glasgow climate summit, governments must now return to the daunting challenge of making good on their emissions-reductions pledges, which at this point remain insufficient to hold warming below 2 or even 1.5 degrees C above pre-industrial levels. ![]()
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