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

Product carbon footprint is total lifecycle GHG emissions of a product, calculated as activity data times emission factors. It supports CBAM compliance, supply chain access and carbon labeling, and cuts enterprise costs. Standard methods solve accounting problems like data collection and standard adaptation.

Carbon Footprint

The EU Carbon Border Adjustment Mechanism has officially entered the taxation stage in 2026. It covers six high carbon products and the coverage scope will continue to expand. Product carbon emission accounting includes five key processes. Enterprises can build an MRV system, complete EU accredited third party verification in advance and ensure data authenticity and traceability to prevent compliance risks and reduce carbon costs.

CBAM

Product carbon footprint is the core prerequisite for CBAM compliance of EU export enterprises they share the same accounting core with reusable data and carbon footprint serves as the tax basis for CBAM. They differ in compliance attributes and accounting scope small and medium enterprises have simplified methods for carbon footprint accounting and the accounted data can realize compliance adaptation cost reduction efficiency improvement and brand value increment.

Carbon Footprint

Product carbon footprint is the data basis of carbon labels which are its visual carriers with differences in attributes and functions. Carbon labels have three types and their proper application is key for enterprise low carbon compliance and green trade.

Carbon Footprint

Product carbon footprint is the core prerequisite for CBAM compliance of EU export enterprises. They share the same accounting core and reusable data, and carbon footprint determines CBAM tariff. They differ in scope and compliance; CBAM covers production-stage emissions. SMEs have simplified accounting methods for compliance, cost reduction and brand enhancement.

CBAM Carbon Footprint