Document Type

Research Project

Publication Date

9-25-2025

Abstract

In 2024, the world exceeded the Paris-approved 1.5 °C threshold for an entire year for the first time. This makes the issue of drastically reducing emissions worldwide ever more urgent. Despite having completed 29 UN climate summits thus far, besides ambitious pledges and agreements, such as the famous Paris Agreement signed at COP21, emissions have continued to rise. This may be because parties agree solely on a target without a complementary roadmap and/or set of policy-oriented tools which would drive the necessary changes. Hence, this paper examines the role of one concrete and relatively easy economic mechanism, namely carbon markets, in mitigating anthropogenic climate change. The Earth is governed by the laws of physics, but the global economy is governed by existing political laws. By setting a scientifically backed global cap on GHG emissions and incorporating appropriate carbon pricing mechanisms, the two worlds can act in harmony rather than in opposition to each other. This paper investigates what such a global carbon market would entail and how it could be implemented, ending with concrete recommendations for policymakers.

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