ABSTRACT
This chapter examines how carbon market mechanisms operate, both in the compliance and voluntary markets and may evolve after the 21st Conference of the Parties (COP21) in Paris. It enquires whether carbon offset projects and trading of emission reductions, particularly in the land use and forestry sector, have been an effective market tool to reduce emissions, conserve and enhance carbon sinks and protect natural resources. The Kyoto Protocol was a milestone in international climate change policy. For the first time, a group of countries committed, under the Protocol, to reducing greenhouse gas (GHG) emissions as part of a global effort to tackle climate change. Forests gradually gained importance under the Kyoto Protocol regime for their role in climate change mitigation. Beyond the UN, countries have used two types of market instruments to reduce carbon emissions: carbon taxes and emissions trading. Forest carbon projects are implemented in both the compliance and voluntary markets.
