What are Carbon Markets?
Carbon markets are systems that allow companies, governments, and individuals to buy and sell carbon credits to offset their greenhouse gas emissions. These markets help fund projects that reduce or remove carbon from the atmosphere, such as reforestation, renewable energy, and carbon capture technologies.
There are two main types of carbon markets:
Compliance Markets – Compliance carbon markets are government-regulated systems where companies must reduce emissions or purchase carbon credits to stay within legal limits. These markets, such as the EU Emissions Trading System (EU ETS) and California’s Cap-and-Trade Program, help enforce emissions reductions and drive investment in cleaner technologies.
Voluntary Markets – Businesses and individuals choose to buy carbon credits to offset their emissions as part of their sustainability commitments. These credits can represent investments in different types of projects that reduce or capture greenhouse gas emissions, such as renewable energy initiatives, afforestation or carbon removal projects.
By supporting carbon markets, organizations can work toward climate goals while driving investment in sustainable solutions worldwide.
Emerging Trends, Navigating Carbon Markets
Carbon credits provide an opportunity to reduce global emissions, scale finance flows for nature and support a just transition.
Seizing this opportunity means adapting to a fast-evolving landscape of new regulations, shifting best practices, and new compliance markets.
Building a lasting and credible strategy means a strong commitment to integrity, alongside measuring and reducing Scope 1, 2, and 3 emissions.
The demand for carbon credits and nature-based solutions is set to grow as organizations seek to complement their direct decarbonization efforts by addressing unavoidable emissions.
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