illuminem’s Post

𝗗𝗮𝘆 𝟮𝟮 - 𝗧𝗵𝗲 𝗣𝗿𝗶𝗰𝗲 𝗣𝗮𝗿𝗮𝗱𝗼𝘅 💸 Still looking for last Christmas presents? If so, you might follow the classic rule: the higher the price, the better the quality. But when it comes to carbon credits, we are not buying presents; we are trying to save the climate. Here, it should be the other way around: Conventional wisdom suggests that to maximize climate impact, you should aim for the lowest-cost emission reductions—reducing more CO₂ for the same budget. Economic theory further suggests that prices should rise as demand for carbon credits increases. As inexpensive emission reduction options gradually become scarce, you’d expect people to shift to more costly solutions, eventually funding even the most expensive projects. Yet, paradoxically, reality doesn’t follow this logic. Instead, the “Chrismas present” rule appears to apply. Some people view low-cost carbon credits with skepticism, suggesting low prices signal low quality, opening doors for greenwashing. Adding to the irony, this criticism reduces demand for carbon credits, lowering prices further as project owners scramble to recoup their investments. And the irony goes on: Some of the priciest carbon credits are considered "best quality," but their high costs make it hard for buyers to offset all emissions. As a result, many abandon their offsetting ambition, leading to fewer emission reductions. So what to do when people dislike both inexpensive (“low quality!”) and expensive (“too costly!”) credits? --------------------------------- 📖 This December, we’re unwrapping 24 paradoxes that challenge our thinking about carbon credits and climate action. Each day, we’ll explore a new puzzle from Renat Heuberger and Steve Zwick's upcoming book about carbon credits. Join us on this journey to rethink the world’s most promising yet paradoxical tool for saving the planet. ➕ You can find all previous paradoxes here: carbonparadox #carboncredits #carbonmarket #carbonpricing #sustainability