Carbon Markets
Compliance vs Voluntary
Carbon markets are broadly split into compliance markets (created and enforced by regulation, where entities face legally binding caps or intensity targets — e.g., CCTS, EU ETS) and voluntary carbon markets (where credits are bought voluntarily for corporate ESG or net-zero commitments, unconnected to statutory obligation). The distinction matters for UPSC because CBAM-type carbon price relief generally recognises only compliance-market carbon prices, not voluntary offsets.
- Article 6 of the Paris Agreement (2015) provides the international framework for carbon markets: Article 6.2 (bilateral cooperative approaches/ITMOs), Article 6.4 (a centralised UN crediting mechanism), and Article 6.8 (non-market approaches)
- India's CCTS is a domestic compliance market and is distinct from Article 6 international transfers, though the two can eventually interact once ICM credits are internationally recognised
- The EU ETS (European Union Emissions Trading System, since 2005) is the world's largest compliance carbon market and the direct precedent for EU CBAM's carbon pricing logic
● Tracked since March 31, 2026 · last seen September 07, 2026 · updates as the daily brief publishes
See it in today’s brief.
Daily current affairs with every static concept explained in place.
Read the daily brief