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Since the 1997 Kyoto Protocol, buying and selling carbon emission rights has been a key strategy in the fight against climate change. By 2005, when enough countries ratified the agreement, this carbon market gained traction. It was further emphasized during the Paris Agreement in 2015 and more recently at COP29 in 2024. The idea is simple: countries can meet their emission reduction goals by purchasing carbon credits from projects that reduce emissions elsewhere, particularly in poorer nations where costs are lower.

However, this approach has drawn criticism. It often shifts focus away from what truly effective climate solutions could look like. Rather than pushing for a complete transition away from fossil fuels, the UN’s strategy seems to promote minor price adjustments. The reality is that the current system fails to provide the necessary investment signals needed for substantial decarbonization.

Economists argue that carbon markets attempt to correct a “market failure.” They suggest that the real cost of emissions isn’t reflected in current prices, so raising carbon prices was seen as a solution. But so far, carbon markets have not effectively lowered emissions in line with the goals set out in the Paris Agreement.

In fact, according to the Intergovernmental Panel on Climate Change (IPCC), to limit global warming to 1.5°C, the price of carbon should be between $170 and $290 per ton. Yet, as of 2024, many carbon pricing mechanisms worldwide fall below this threshold. For instance, while Uruguay’s carbon tax is close at $167, Indonesia’s carbon price is only $0.61.

These discrepancies create a challenge: when prices vary so drastically across countries, it undermines global efforts to reduce emissions. The push for a single international carbon price is complicated by the competitive nature of the global economy, where countries may hesitate to impose high prices for fear of losing investment. This leads to instability in carbon pricing, which is detrimental to achieving climate goals.

Meanwhile, the reliance on offsetting emissions through projects like reforestation is also problematic. Shell, for example, claims they need to reforest areas three times the size of the Netherlands to meet their climate targets. Such ambitious goals raise questions about feasibility and the true effectiveness of these projects.

Despite these challenges, fossil fuel corporations continue to invest heavily in political campaigns to influence regulations, spending over $445 million during the 2024 elections in the U.S. alone. This highlights a concerning trend: a small number of institutions are responsible for a significant portion of greenhouse gas emissions, yet poorer regions bear the brunt of climate impacts.

In summary, while carbon pricing and forest offsetting might contribute to climate solutions, they cannot replace the need for comprehensive public planning. To drive meaningful change, systematic efforts are necessary, not just market-based solutions. Climate action requires bold, structured transitions that focus on practicality and sustainability instead of relying on the uncertain mechanics of carbon markets.

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