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Demand in a fragmented global carbon market: outlook and policy options

This report, conducted by GreenStream together with Climate Focus, argues that the global carbon market currently faces a deep demand crisis. The consequent price fall reduces the incentive to make low carbon investments and thus increases the risk of locking in carbon-intensive infrastructure. However, despite the current lack of ambitious global climate policy, various market-based approaches are emerging around the world, indicating increasing scope and fragmentation of the carbon markets. This report analyses the status and outlook of global carbon markets and identifies measures and circumstances for creating new demand for carbon credits, taking into account the trend towards fragmentation of carbon markets. It concludes that demand for international credits will come mainly from voluntary pledges, marking a shift from demand by commitments under the Kyoto Protocol between 2008 and 2012.