The Paradox and Fallacy of Global Carbon Credits: A Theoretical Framework for Strengthening Climate Change Mitigation Strategies

Abstract

Carbon credit systems have emerged as a key policy tool in global efforts to mitigate climate change. Under these market-based schemes, entities that reduce greenhouse gas emissions below a specified cap are issued tradable credits that can be sold to entities exceeding their emissions allowances. In theory, this creates financial incentives for emissions reductions and allows reductions to occur where they are most cost-effective. However, this Policy Analysis argues that the increasing reliance on global carbon markets as a climate solution is deeply problematic and paradoxical. Drawing on interdisciplinary perspectives from environmental economics, law, ethics, and political ecology, I explore the problem through a theoretical framework elucidating the inherent limitations and fallacies underpinning carbon credit approaches. I contend that carbon markets (1) fail to produce real, verifiable emissions reductions; (2) exacerbate global inequities and undermine climate justice; (3) distort climate policy by emphasising cost-effectiveness over ecological necessity; and (4) delay the structural economic changes needed to achieve deep decarbonisation. My analysis is supported by a narrative review of the literature, case studies, and empirical evidence. This Policy Analysis concludes by proposing alternative climate mitigation approaches that could help transcend the paradoxes of global carbon credits, including accelerating fossil fuel phaseouts, scaling up public investment in low-carbon infrastructure, advancing climate justice principles, and rethinking carbon accounting frameworks. Article Highlights

• Carbon credit systems have emerged as a key policy tool for mitigating climate change, but their effectiveness and equity are increasingly being questioned.

• This Policy Analysis explores the problem through a theoretical framework that elucidates four major paradoxes and limitations of carbon markets.

• The analysis draws on interdisciplinary perspectives and is supported by a narrative review of the literature, case studies, and empirical evidence.

• The Policy Analysis proposes alternative climate mitigation approaches that could help transcend the paradoxes of global carbon credits.

• Developing effective and equitable climate change mitigation policies in the coming decades will require moving beyond the limitations of carbon markets.

Graphical Abstract