Carbon Market
Definition
A Carbon Market is a trading scheme that creates financial incentives for activities that reduce or remove greenhouse gas emissions. [1]
In these schemes, emissions are quantified into carbon credits that can be bought and sold. One tradable carbon credit equals one tonne of carbon dioxide, or the equivalent amount of a different greenhouse gas reduced, sequestered or avoided.
Carbon credits can be bought by countries as part of their NDC strategy, by corporations with sustainability targets, and by private individuals that want to compensate for their carbon footprint.
The supply of carbon credits comes from private entities or governments that develop programmes to reduce or remove emissions. These programmes are certified by a third party and registered under a carbon market standard.
For carbon markets to be successful, countries must work together to secure robust carbon accounting, ensure transparency for carbon market transactions, implement safeguards against human rights abuses and other adverse societal impacts, and combat Greenwashing and the misrepresentation of carbon-neutral products and services.
