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Private Company Policies in the Nexus Between Carbon Credit Markets and Local Welfare

Updated: Oct 19, 2022

One measure which has been proven to reduce greenhouse gas emissions while also demonstrating the potential to aid the economically vulnerable is carbon markets. Carbon markets give private entities the ability to generate outcomes in poverty alleviation as well as positive externalities as a result of companies meeting their climate change goals through the purchase of verified carbon units. For this reason, a detailed understanding of the relationship between the carbon markets and positive outcomes for local human welfare is necessary.

For climate mitigation, it is ideal that emitting companies find their carbon-neutrality first through changes in their production chains. Once they cover all the opportunities to increase their carbon efficiency, they could access the carbon offsets option. The carbon offsets are born into an accredited process that consists of an independent evaluation and certification of the quality of packages of mitigation results. However, the expected quality is not ever achievable. During the accreditation process, sometimes mistakes happen—especially when governments do not offer precise and transparent Monitoring, Reporting and Verification (MRV) rules and their implementation capacity.