Carbon Pricing Meets Offsets

Industrial decarbonization is crucial to achieving global climate goals, but the interactions between CO2 pricing and voluntary offsets remain poorly understood. This chapter, therefore, examines how carbon pricing, offset integrity, and governance shocks collectively shape the investment decisions of industrial companies. Methodologically, the study combines a global company panel (2005–2025), difference-in-differences estimates, event studies, and sectoral case analyses. The results show that (1) rising and credible CO2 prices are the strongest driver of green investment; (2) low-integrity offsets systematically weaken this price effect; (3) high-quality, CCP/VCMI/SBTi-compliant offsets, on the other hand, have a complementary effect and increase overall investment; (4) governance and reputation shocks abruptly change expectations and strategies. Overall, an interdependent control system emerges in which only high-quality offsets and stable price paths enable robust industrial transformation paths until 2030/2050.