Navigating Compliance and Ethical Challenges in Carbon Trading: Strengthening Global Frameworks for Market Integrity and Sustainability

Abstract

Anthropogenic climate change represents an unprecedented existential threat to global ecological systems and human civilisation, necessitating urgent and comprehensive mitigation strategies. This paper provides a critical analysis of specific regulatory, verification, and ethical challenges that currently undermine carbon trading markets as useful climate change mitigation mechanisms. We argue that current implementations of carbon trading systems largely fail to mitigate climate change. They often create the illusion of progress. Our examination focuses on documented issues in existing markets: regulatory inconsistencies that create enforcement gaps, verification deficiencies that compromise credit integrity, and persistent questions about additionality and double-counting. We identify how these structural flaws create problematic incentives that may discourage actual emissions reductions while enabling lower-quality credits to proliferate. The analysis further addresses the ethical dimension of carbon markets, documenting how the burden of emissions mitigation falls disproportionately on developing countries, particularly in the Global South, despite their historically minimal contributions to global emissions. We examine specific documented cases where political misalignment, energy injustices, and the prioritisation of carbon sequestration over development have undermined both climate goals and sustainable development. The paper concludes by evaluating how emerging technologies and governance approaches could potentially address these documented challenges, while acknowledging the limitations of technological solutions absent broader structural reforms.