Carbon markets

This chapter seeks to analyze the dilemmas of financing sustainable development. Specifically, carbon markets are addressed and found to have diverse operating structures, determined by their financing needs and greenhouse gas emission reduction commitments. This heterogeneity makes it difficult to assess their effectiveness in driving decarbonization and the energy transition promoted by the Paris Agreement and the Kyoto Protocol. Empirical evidence indicates that carbon markets are not infallible and have required state intervention to improve their functioning. This situation casts doubt on the assumption that carbon markets are the most efficient mechanism to address pollution and climate change.