Abstract
Carbon markets have become one of the principal market-based responses of international environmental law to climate change, because they allow emission reductions to be priced, traded and counted across borders. The Kyoto Protocol and the Paris Agreement, particularly Article 6 of the latter, institutionalised carbon trading on a global scale, with the aim of securing cost-effective mitigation while supporting sustainable development.
Their implementation, however, has raised persistent legal and regulatory difficulties. Weak transparency, uneven monitoring and verification, the double counting of reductions and the absence of effective enforcement have all diminished their practical value. The Clean Development Mechanism (CDM) in particular has been criticised for inefficiency, poor environmental integrity and inadequate regulatory supervision. A study prepared for the European Commission concluded that eighty-five per cent of the projects it surveyed had a low likelihood of ensuring that reductions were additional and were not over-estimated.
This study evaluates the effectiveness of the international legal frameworks governing carbon markets, examines how those frameworks attempt to reconcile economic efficiency with environmental protection, and considers how problems such as phantom credits and over-crediting bear on the legitimacy of carbon markets. It seeks to identify the structural and regulatory shortcomings of the present regime and to argue for greater legal consistency, sharper accountability and stronger enforcement.