The Origins of Carbon Markets
UNDERSTANDING THE BIGGER PICTURE: A BRIEF HISTORY OF CARBON MARKETS
Exploring the history of carbon markets is necessary to gain a deeper understanding of where the VCM is today and where it is headed. We propose to take a historical perspective on the evolution of carbon markets: looking at their beginnings and origins, examining the development of various domestic and international markets, and exploring today’s landscape of voluntary and compliance markets.
Over the past decade, there has been a significant increase in global awareness about the risks arising from climate change. Governments, businesses, and individuals are more and more aware of the need to shift from prioritizing profit to safeguarding nature, resulting in unprecedented collective efforts toward achieving net-zero emissions. This led to the rise of carbon markets as one solution to accelerate climate action.
The role and perception of the voluntary carbon market has evolved during this time. Initially used by climate action pioneers, they have gained momentum and are now also playing a role in compliance markets.
The US pioneered the first market-based mechanisms to put a price on carbon and created economic incentives for emission reductions appeared in the last decades of the previous century: