As global leaders, scientists, and industry figures gather at COP 29 in Baku, Azerbaijan, calls for a unified global carbon market are intensifying to drive meaningful reductions in greenhouse gas emissions.

Carbon markets, which allow companies to buy and sell emission credits, remain complex and fragmented, with policies and prices varying widely across regions.

Dr Tej Gidda, GHD’s Global Leader for Future Energy, argues for a cohesive, global carbon pricing mechanism as essential for advancing climate efforts. 

“Carbon pricing and carbon credits are a powerful lever to mitigate emissions, and they’ve been in place in some form for nearly 25 years,” says Dr Gidda from Baku at COP29 - the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC)

“But these mechanisms vary significantly by country, region, and even by state or province which creates a lack of consistency in the market,” he says. 

“A transparent, common carbon price on carbon could simplify the landscape and make it easier for developers and investors to understand the true value of their emissions reductions.”

Currently, this inconsistency makes it challenging for businesses to navigate opportunities and risks in carbon markets.

Dr Gidda notes that a global price on carbon would address these inconsistencies, enabling global trade of carbon credits and establishing a market that can efficiently drive emissions reductions worldwide.

“A unified price allows us to maximise efficiencies, lower emissions, and offer businesses the predictability they need to invest in green technology,” he explains. “It also creates a clear, common price that more accurately reflects the global impact of carbon emissions.”

Standardising Carbon as a Financial Tool

A global carbon price could also serve as a financial instrument, driving both accountability and opportunity.

“Used appropriately, a global carbon price could become a tangible liability on the balance sheets of fossil fuel companies, pushing them toward a more rigorous approach to net zero planning,” Dr Gidda suggests.

“For clean energy developers, that same carbon price would be a line item that adds new revenue streams, helping substantiate their business cases and further incentivising low-carbon technologies.”

Carbon pricing also has the potential to simplify regulatory mechanisms, says Dr Gidda. By establishing a clear global standard, governments could introduce consistent compliance requirements, enabling a fairer and more transparent path to reducing emissions. 

“A universal carbon price isn’t just about cutting emissions - it's about embedding a consistent regulatory framework that holds emitters accountable while enabling green technologies to thrive.”

Challenges in Creating a Global Carbon Market

Creating a globally aligned carbon market has been in discussion for years, but progress has often been slowed by conflicting interests and economic pressures.

“Yes, it’s complex and challenging,” Dr. Gidda says, “but every delay impacts our ability to tackle climate change effectively. We need to align on this issue globally, and that requires cooperation and a willingness to address each country’s unique challenges.”

The Path Forward: Creating a Real Price on Carbon

An effective global price on carbon would consider not only the cost of mitigating emissions but also the long-term environmental and economic impacts of climate change.

“The big questions are: How do we set a meaningful price on carbon globally, and how can it be used as part of compliance mechanisms?” says Dr Gidda.

“It’s not just about offsetting costs but addressing the broader damages associated with climate change, creating a financial structure that reflects the true impact of carbon emissions on society.”

Benefits for Industry and Society

Dr Gidda highlights that a standardised carbon price could generate significant economic benefits, including job creation in the green sector and new investment in clean technologies.

“Carbon pricing could generate revenue for governments to reinvest in green energy projects and other environmental protections. For businesses, a predictable carbon price makes it easier to plan long-term and reduces risk, encouraging greater investment in strategies that cut emissions.”

He believes that establishing a global price on carbon is key to accelerating the next phase of the energy transition. 

“A global carbon price isn’t just a stopgap; it’s a vital tool to drive lasting, impactful investment in green infrastructure and innovation.”

About Dr Tej Gidda:

Dr Gidda is a distinguished expert in clean energy transitions and currently serves as the Global Leader for Future Energy at GHD. With over 20 years of industry experience, Dr Gidda holds a PhD in Environmental Engineering and is a registered Professional Engineer in Ontario. His work focuses on integrating clean energy technologies into existing systems and developing innovative strategies to overcome challenges related to reliability and affordability. Dr Gidda's expertise spans hydrogen, renewable natural gas, traditional renewables, energy from waste, energy security, and planning. He is also an adjunct professor at the University of Waterloo.

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