The Strategic Role Of Carbon Markets: Incentivizing Carbon Dioxide Removals In Support Of A Low-carbon Economy

The shift towards a low-carbon economy is pivotal to ensure sustainable environmental, social and economic development, yet it is hindered by significant technological, financial, and other challenges. This policy brief outlines the critical role of carbon dioxide removals (CDR) to achieving that objective. It emphasizes the need for policy frameworks, such as carbon markets, in incentivizing CDR solutions and fostering their growth in a way that is transparent, validates their additional emission removal benefits, and secures trust to invest in CDR technologies and solutions. By putting a price on carbon emissions, carbon markets serve as essential tools for financing CDRs. This policy brief delves into the effectiveness of carbon pricing in promoting the uptake of CDR technologies and solutions. It presents a thorough examination of current carbon market dynamics in supporting CDR globally, identifying areas for improvement, and opportunities to amplify their impact. It also sets out recommendations for overcoming current economic and financial barriers to efficient investment in CDRs, with the goal of providing policymakers and industry stakeholders with actionable insights. Key-words: Carbon dioxide removal; Carbon markets; Low-carbon economy; Policy frameworks.