appropriate to apply quantitative limits to the use
of domestic offset units to limit their potential
impact on these potentially fragile markets. As
the market matures, these limits may be removed,
ensuring that domestic offsets trade at the same
price as other carbon units. As MRV processes
improve and more sectors are covered, the
domestic offset market will gradually disappear.
Similarly, the use of international units may
not be allowed in the early years of the carbon
market given its fragility, but over time
movement to a fully linked global carbon market
will reduce costs and increase the robustness of
interlinked ETSs. Given the current state of the
global carbon market, full linking may take
several years to progress. In the interim, limited
linking can be used, with quantitative limits used
to quarantine the potential impacts of these units
on markets. The choice to move to full linking
will have implications across a range of policy
areas. For instance, traditional price controls may
be inconsistent with full linking as the
Fig. 62 Sequencing evolutionary and revolutionary approaches to governance. Source Vivid Economics
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S. Yaodong and A. Gillespie