Carbon markets need reform.

A new PESD Working paper, by Michael Wara and David Victor, argues that substantial fraction of the international carbon market does not actually represent real reductions in emissions. They also argue that these international credits, which are part of the Kyoto Protocol's "Clean Development Mechanism (CDM)," will not offer companies reliable ways to contain the cost of complying with limits on emissions.

Note: click on "more" to open a PDF version of the paper.