Informal Carbon Markets

In the sixteen years since the adoption of the Kyoto Protocol, emissions allowance and offset markets have splintered and fragmented into a diverse array of market-based mechanisms."Carbon trading," as it is colloquially known, has produced positive developments in greenhouse gas emissions reduction as well as unexpected problems. Although the large majority of trading occurs on compliance (regulated) markets, voluntary markets account for a growing volume of emissions offset trading. This voluntary market trading is unregulated, independent of formal exchange platforms, and not mandated by any government organization. In effect, voluntary carbon markets constitute a small but significant shadow economy within the wider global market for allowances and offsets.