Understanding Carbon Markets

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This chapter provides a comprehensive overview of carbon markets, comparing traditional environmental policies to market-based approaches aimed at reducing emissions. It differentiates between compliance and voluntary markets, discussing their distinct structures, growth dynamics, and ongoing challenges regarding credit quality and legitimacy. Additionally, the chapter highlights the role of carbon markets in promoting sustainability and achieving decarbonization goals while emphasizing the shift towards higher-quality carbon credits.

On this podcast, we often hear how achieving the low-carbon transition on a global scale will require a mix of solutions. Carbon markets are one key tool available to companies and countries.

In this episode of the ESG Insider podcast, we bring you part one of a two-part miniseries on carbon markets. We dig into voluntary and compliance markets, including how they're structured and used, how they're evolving, and the challenges and opportunities ahead.

We talk with Roman Kramarchuk, Head of Climate Markets & Policy Analytics in the Research & Analytics business at S&P Global Commodity Insights. He explains how carbon markets have expanded around the world in recent years — and how that growth is expected to continue.

"We've got a quarter of the world's emissions now covered by some form of carbon price, and that number is only going to go up," Roman says.

Listen to our episode about Article 6 of the Paris Agreement here: https://www.spglobal.com/esg/podcasts/at-cop26-why-article-6-matters-to-companies-and-investors

Click here to learn more about S&P Global Commodity Insights' research and analysis of carbon markets: https://www.spglobal.com/commodityinsights/en/commodities/energy-transition/carbon

This piece was published by S&P Global Sustainable1, a part of S&P Global.

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