To Fight Climate Change, We Need a Better Carbon Market
- Media Manager
- Aug 22, 2023
- 2 min read
The New York Times
Written By: Peter Coy
Published: August 23rd, 2023
Gresham’s Law says that bad money drives out good. If you have two coins with a face value of $1, you will spend the bad one that contains 25 cents’ worth of metal and stash away the good one that contains $1 worth of metal.
Something like Gresham’s Law is at work in the carbon offset market, which was set up to fight climate change. Bad carbon credits are driving out good carbon credits. And that’s a big problem for the effort to curb the greenhouse gas emissions that are heating up the planet and wreaking havoc from the Arctic to the Antarctic.
An Aug. 16 report for clients of the British bank Barclays put a positive spin on the problem but contained some worrisome information.
The Barclays report focused on the voluntary carbon market. That’s the one that companies such as Microsoft and Salesforce are using to help reach their goals of net-zero carbon emissions. If they can’t reduce their own emissions all the way to zero, they can go into the market and buy credits from someone in, say, Brazil who has earned them by planting trees to soak up carbon dioxide from the atmosphere. The voluntary carbon market can be a valuable mechanism for directing investment to developing nations that need help in the fight against climate change.
“The market will get big because we need it to get big,” Austin Whitman, the chief executive of the nonprofit Climate Neutral, told me. “We will not hit net zero without large and well-functioning carbon markets.”
Here’s the Gresham’s Law problem, though: According to the Barclays report, the price of carbon credits has fallen to around $2 per metric ton of carbon dioxide removed from the atmosphere, down from around $9 early last year.
