Unusual optimism. An international minimum corporate tax rate? The US re-entering the Paris Agreement and leaning in on multilateral climate discussions? For the first time in many years, I open the newspaper (metaphorically speaking, of course) and I’m pleasantly surprised. I don’t remember the last time I felt this way.

But the feel-good factor can easily evaporate. For global warming, the sense of urgency is clear: increasing evidence of tipping points in the Amazon, the outbreak of a pandemic based on a zoonotic virus, elevated levels of methane in the atmosphere. All are man-made changes which we will have to reverse and whose effects we will have to live with - probably for a long time.

It’s not about 2050, it’s about the next decade. The words were uttered by Michael Bloomberg in a conference recently. He was alluding to lofty aims set by corporations to reach ‘net zero’ in 2050, which often serve as a resting pillow and get them off the hook. Net zero by 2050 is problematic for two reasons: 1) what exactly does it mean? and 2) we cannot wait for 2050. For net zero to mean anything it must be associated with meaningful implementation efforts starting today. Criticism has also been directed at large carbon intensive companies who undertake only minimal or cosmetic efforts to decarbonise their own operations and instead buy offsets to decrease emissions elsewhere – but often with dubious additionality, leakage and climate justice features. I may not agree with all the conclusions of Greenpeace and other NGOs who are critical of offsetting, but the issues they list are real.

Market mechanisms – who needs them? Increasingly, the consensus is that decarbonisation has to start with measures by the companies themselves – in line with mitigation hierarchy thinking. It’s a bit of an awkward position for an economist to be in, as we are brought up to think that it doesn’t matter where the emissions reductions happen. If someone else can reduce emissions more cheaply and you can buy their allowance or credit that is an efficient solution. This is why the world’s largest emissions trading system (the EU ETS) was created. And it’s not like that is no longer true; the concept can work, it’s just that the assumptions under which the idea works are often not there. Most crucially, the ‘cap’ in cap-and-trade is often not tight enough. And the dubious quality of some credits (offset) means that they wouldn’t pass an equivalence test (the impact of a tonne of carbon removed is not necessarily equal to a tonne of offset carbon). So market mechanisms are welcome, but we need them to be designed carefully to ensure ambitious outcomes and with a greater emphasis on distributional effects than in previous manifestations.

Jurisdictional REDD+ credits have the potential to become one such successful market instrument. The concept has been developed based on decades of experience – both good and bad – in the voluntary forest carbon market, and designed to mitigate the flaws of leakage, additionality, and inflated baselines. Crucially, jurisdictional REDD+ seeks to ensure country ownership and improved transparency and distributional impacts. I’m excited to be working on a paper for private sector investments under REDD+ and the Architecture for REDD+ Transactions – to be published shortly by Winrock.