Nori: A Market-Based Solution For Tackling Climate Change

Tackling the problems associated with climate change will be one of – if not the largest – issue that the current generation faces over the coming decades. The secondary and tertiary effects resulting from climate change are staggering. Mass migration from non-arable lands. Increased frequency and severity of weather events like hurricanes, flash floods, droughts, and wildfires. Decreased biodiversity and plant fauna. The list goes on.

In juxtaposition with the increasing climate crisis has been a direct shift in consumer behavior. Consumers around the world are changing their eating habits, purchasing behaviors, and social norms. Notably, this has been reflected in the companies that people work at with Microsoft’s Climate Innovation Fund committed to investing $1 billion in clean tech solutions over the next four years. Meanwhile, Google aims to operate carbon-free by 2030, a goal more ambitious than that of the Biden-Harris administration of the U.S government.

Two Types of Carbon Markets

Companies like Google and Microsoft have gone so far as to offset their carbon emissions since inception. Typically this is conducted by purchasing carbon offsets – certificates representing the reduction of carbon – from renewable energy projects or carbon sequestration (growing plants that store carbon in the soil). The purchasing of voluntary – non-government mandated – carbon offsets continues to grow reaching the highest level since 2010 – since the closing of the Chicago Climate Exchange.

The carbon markets have now funneled over $5 billion into emission reduction activities over the past two decades.

The voluntary carbon market co-exists with the compliance carbon markets which is driven by regulatory caps on greenhouse gas emissions and operates at a significantly larger scale. Carbon offset and emissions trading volume grew 34% and peaked at $215 billion in 2019 with over 80% of the total volume accounted for by the EU’s Emissions Trading System. The total market for carbon emissions trading is set to grow with China set to launch a nationwide trading scheme in 2021.