Carbon
Carbon Sequestration objectives have lead to formation of global markets facilitating the trade of carbon credits. Ongoing discussion of pathways are in full swing across the globe. The attempt here to to explain basic markets and concepts. The main types of markets are- Voluntary and Compliance Markets. Voluntary markets are markets where buyers are buying credits on voluntary basis to reduce their carbon footprint from their work. Compliance markets are regulated markets where buyers are mandated to reduce their emissions by law.
EU ETS, Europe
The oldest and the biggest carbon market in EU ETS. It is based on the fairly famous concept of, “ cap and trade”, to reduce emissions via carbon markets. It applies to entire European Union and European Free Trade Countries. It is mandatory for companies working in electricity, energy intensive, maritime and aviation sectors, with some exceptions made on the size of these companies.
U.S. Carbon Markets
California Cap and Trade is the only formal market in U.S. and most of the companies are turning to voluntary markets for their needs admist the rising consumer pressure for going carbon neutral in their operations.
Other Major Markets, NZ, China, and India
The New Zealand Emissions Trading Scheme is the main tool for the government for reducing emissions. Australia’s Carbon Credit Unit Scheme (ACCU) supports the projects that either reduce or remove greenhouse gas emissions. China’s emissions trading scheme (ETS) was started in 2017 to limit and reduce CO2 emissions in a cost effective manner. India has made a bold move to revamp their Carbon Credit Trading Scheme (CCTS) in 2024.