Three Views of Resolution in Carbon Markets Parsing Contractual, Regulatory and Atmospheric Claims

Abstract

Abstract Carbon markets clear trades, enforce contracts, and satisfy regulatory obligations, yet atmospheric exposure remains open even where actors proceed in good faith. This article develops a typology of resolution—contractual, regulatory, and atmospheric—to explain why market execution and legal compliance do not themselves close the atmospheric exposure emissions create. The distinction matters because market instruments are routinely used to support claims of closure even when transactions resolve only narrower obligations. Contractual resolution resolves private obligations between counterparties without necessarily closing atmospheric exposure. Regulatory resolution extinguishes statutory duties within a jurisdiction although politically constituted constraints may diverge from the global carbon budget. Atmospheric resolution differs in kind. Because long-term warming is governed by cumulative CO₂ and a finite budget, an emission remains a charge against that budget until matched by an equal quantity durably removed and stored. Atmospheric resolution makes that matching a continuing legal duty, paired with a remedy requiring restoration following impairment. When instruments resolving different obligations are accepted as substitutes, markets impose parity on non-equivalent products. The pooled market clears on the least demanding accepted instrument, so prices reflect its supply cost rather than the cost of removal, durable storage, monitoring, and restoration. Only durable removal with that duty and remedy can support closure claims. Reductions and avoided emissions remain valuable because they preserve remaining carbon budget and limit exposure growth, but they cannot close exposure from past emissions. Atmospheric closure is therefore not a matter of improved measurement or more conservative baselines alone, but rather it requires a continuing obligation tied to measured, durably stored removal, and restoration in the case of impairment.