This chapter introduces the urgent and complex challenge of climate change, positioning it as the defining environmental issue of the twenty-first century with profound consequences for ecosystems, economies, and societies. It critically evaluates the current international legal frameworks, particularly the Paris Agreement, for their inability to produce enforceable and effective measures to combat global warming. By highlighting the limitations of multilateral negotiations, including collective action problem, free-riding, carbon leakage, and the asymmetry between developed and developing nations, the chapter emphasizes the need for innovative governance mechanisms to bridge these gaps. The “economic analysis of law” lens is used to evaluate the interplay between environmental goals and economic realities, underscoring the feasibility and efficiency of market-based instruments in addressing the externalities of greenhouse gas emissions.