Carbon markets have gained prominence as a means to incentivize emissions reductions and promote the transition to a low-carbon economy. These markets operate on the principle of cap-and-trade or carbon pricing, where a limit (cap) is set on the total emissions allowed, and entities can trade carbon credits to meet their obligations.

Carbon markets create economic incentives for industries and businesses to reduce their emissions. They encourage innovation, promote the adoption of cleaner technologies, and help accelerate the transition to a sustainable energy future. Moreover, they provide a mechanism for funding carbon offset projects that remove or reduce greenhouse gases from the atmosphere.

Understanding carbon markets is crucial for businesses, governments, and investors seeking to play a role in climate action. By participating in these markets, stakeholders can not only reduce their carbon footprint but also contribute to global efforts to combat climate change.