CEPR report finds VCM blunts corporate emissions reduction incentives

A report by the Centre for Economic Policy Research (CEPR) titled 'An autopsy of the voluntary carbon market' argues that the VCM disincentivises corporate emissions reductions. The report, co-authored by Ugo Panizza, Francesco Tripoli, and Beatrice Weder di Mauro, claims that buying cheaper carbon credits allows companies to avoid the costs of improving production processes to cut emissions. Using data from Allied Offsets, corporate emissions, and financial accounts, CEPR identified four key problems: market dominance by unverified avoidance projects, 3.5 billion unused credits creating a 'market for lemons', a small number of flagship projects accounting for most retirements, and a lack of a single carbon credit price. The report also found that companies that stopped buying credits after January 2023 reduced their Scope 1 emissions by approximately 20% more than those that continued purchasing credits.

This summary was written by carbon.fyi from the reporting linked above. It is not a quotation; cite the original source.