Exploring governments’ efforts to shape carbon credit markets

Carbon credit markets are a tool that can support greenhouse gas mitigation. However, to effectively support climate action, they must operate with environmental integrity. In the last decade, government influence receded in carbon credit markets, but several governments are now exploring how to increase their engagement with such markets. This paper explores governments’ efforts to shape carbon credit markets, with a focus on opportunities to enhance integrity. The paper highlights that governments can play an important role in enhancing environmental integrity, by promoting carbon credit quality improvements and clarifying the conditions under which credits can be used. For instance, governments could support ambitious quality standards or encourage the responsible use of carbon credits. To enhance integrity, governments can leverage new frameworks, notably provisions under Article 6 of the Paris Agreement. Governments can promote harmonisation to prevent integrity framework differences from negatively impacting carbon credit markets.