Carbon credits issued in the voluntary carbon market are an important source of funding for projects in developing countries designed to reduce greenhouse gas emissions, such as forest preservation and renewable energy. Beyond their potential to provide billions of dollars of private sector financing for decarbonization, carbon credits can generate economic opportunity, employment, and biodiversity. But they are controversial, mainly (but not only) because it is difficult to confirm and to quantify their emissions benefits. This article argues that policymakers should nonetheless support voluntary carbon market growth, so long as companies use carbon credits to mitigate emissions they cannot avoid on their net zero pathways, rather than offsetting emissions they can and should reduce. In this way, carbon credits can operate as a voluntary tax on unavoidable emissions, used to finance the energy transition in developing countries.



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