Part 6/9:
Leakage describes the situation where emission reductions in one area lead to increased emissions elsewhere. For instance, expanding renewable energy use must also consider the environmental costs of mining the materials needed for that infrastructure. Such complexities further complicate the narrative around carbon offsetting.
The Market Dynamics
Carbon credits exist in two primary markets: voluntary and compliance. Voluntary credits allow companies to opt-in, typically to appeal to environmentally conscious consumers, whereas compliance credits are regulated, imposed by international regimes. This distinction is crucial, considering that companies can use voluntary credits merely as an alibi to sustain their pollution levels without making substantive changes to their operations.