Resources
What Is a Carbon Market?
2025-06-09
GHG Inventory Knowledge
carbon market
Introduction

A carbon market is a system where companies trade carbon emission allowances, turning the right to emit into a financial asset. It’s a key policy tool that uses market forces to reduce greenhouse gas emissions efficiently by channeling investment toward low-cost reduction opportunities.

Two main types of carbon markets:

Compliance markets
Regulated by governments, where companies must hold enough allowances to cover their emissions. Non-compliance leads to penalties.
Used by organizations to offset emissions on a voluntary basis, often as part of carbon neutrality or ESG goals.

How a successful carbon market behaves

The primary product traded is the carbon allowance, but many systems allow partial use of carbon offsets from approved projects. In some schemes, up to 10% of compliance obligations can be met using these verified reductions.
A successful carbon market requires strong monitoring, reporting, and verification (MRV) systems, transparent pricing, and broad participation. As more countries adopt carbon pricing, carbon markets are expected to become a core part of global climate strategy, supporting the path to net-zero emissions.

More Resources

CBAM certificate is the only legal voucher for EU carbon cost offset, requiring report-verification-purchase-write-off process; centralized sales start Feb 2027 (priced with EU ETS), settlement by Sep 30, full repurchase by Oct 31, unused 2-year-old certificates cancelled Nov 1 (no compensation).

CBAM

The EUDR-China-EU trade report (Fern-supported, BellaTerra-written) notes compliance core is supply chain control & traceability; classifies non-core (soybean for domestic use) and core industries (wood products exported to EU), and lists 3 compliance key points.

EUDR

Practical guide for enterprise carbon footprint quantification data, defining 6 core categories, regulating primary/secondary data use, offering 5-step collection framework & quality principles, adapting to CBAM, carbon labeling and ISO 14067, enabling efficient carbon data compliance.

Carbon Footprint

The final EU CBAM transition period reporting window is closing, the last drill before "taxation and compliance" phase; transition needs quarterly reports without payment, full phase requires carbon tariffs with reduced free allowances, dual responsibilities, mandatory verification, stricter penalties; enterprises confirm 6 products, strengthen data traceability, cooperate with EU importers.

CBAM

The core of EUDR compliance is establishing a low-cost and confidential evidence system, following the data minimization principle. It requires providing necessary data around three core issues, clarifying data boundaries and transmission norms, and avoiding compliance and confidentiality misunderstandings.

CBAM