One problem is that when the credits can only be used for virtue signalling, the same energy generation gets counted twice. For example, Norway produces virtual

One problem is that when the credits can only be used for virtue signalling, the same energy generation gets counted twice. For example, Norway produces virtually all of its power from renewable sources, and then sells the credits to Germany. The Norwegian consumers know that they are using renewable power, because they can see the hydro dams, and the Germans know that they are using renewable power, because they bought the carbon credits. Even though they can see coal or gas plants that are "obviously" actually powering their grid. This doesn't work as well if you actually have cap-and-trade for carbon emissions, and fine countries that don't have the right amount of credits. In that case a country that sells all its credits ends up getting fined.