Carbon Markets

What are carbon markets?

Carbon markets or trading schemes typically place a cap on allowable emissions by organizations and set a price for those emissions. Firms are motivated to reduce emissions in order to sell credits, or otherwise purchase credits to stay below their cap. Examples include the California Cap-and-Trade Program, Regional Greenhouse Gas Initiative (RGGI) on the US East Coast, EU Emissions Trading System (EU ETS), and China's national emissions trading scheme.