Liquid carbon: legal standardisation in voluntary carbon markets

Voluntary carbon markets (VCMs) are at a watershed. Despite ongoing controversy, considerable political momentum seeks their expansion to raise finance for climate mitigation and adaptation in the Global South. Based on extensive interviews and document analysis, this article studies how legal experts attempt to render VCMs ‘liquid’. It focuses on a project at the International Institute for the Unification of Private Law (UNIDROIT) which leverages its status as an intergovernmental organisation to clarify the elusive legal nature of these commodities. First, I show that the initiative frames its private law standardisation process as ‘non-regulatory’, although regulatory questions permeate the project. Second, it envisages the spatial (and legal) isolation of carbon credits from their places of origin. In effect, this leads to (1) the transformation of host countries’ legal frameworks, for example by encouraging land use reforms to secure property rights over sequestered carbon; and (2) inter-jurisdictional competition for financial services related to carbon credits – a form of ‘commercialised sovereignty’. In both cases, liquidity becomes a function of hierarchical legal space, shaping VCMs primarily as sites of financial speculation and experimentation. This renders their quality as legitimate and equitable sources of climate finance dubious.