Demand in a Fragmented Global Carbon Market: Outlook and Policy Options

image of Demand in a Fragmented Global Carbon Market: Outlook and Policy Options

The global carbon market currently faces a deep demand crisis. The consequent price fall reduces the incentive to make low-carbon investments and thus increases the risk of locking in carbon-intensive infrastructure. The global carbon market relies on ambitious climate policy and consists of a mosaic of different schemes. Despite the current lack of ambitious global climate policy, various market-based approaches are emerging around the world, indicating increasing scope and fragmentation of the carbon markets. This report, conducted by GreenStream together with Climate Focus, analyses the status and outlook of global carbon markets and identifies measures and circumstances how new demand for carbon credits could be created to strengthen global efforts to limit the global average temperature rise to 2°C, taking into account the trend towards fragmentation of carbon markets.




According to the UNEP Synthesis Report “The Emissions Gap Report 2012”, the global emissions have already exceeded a level, which in 2020 would be consistent with the 2°C target. The currently estimated emissions gap in 2020 of being on track to stay below the 2°C target is 8 to 13 Gt CO2e. The recent UNFCCC conference in Doha noted this gap with grave concern and decided “to identify and explore in 2013 options for a range of actions that can close the pre-2020 ambition gap with a view to identifying further activities for its plan of work in 2014.”


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