What are carbon markets?

Carbon markets are systems for buying and selling permits to emit carbon dioxide (CO₂) and other greenhouse gases. The goal of carbon markets is to reduce emissions by creating an economic incentive for businesses and individuals to emit less CO₂.

Carbon offsets are a type of credit representing the reduction or avoidance of one metric ton of CO₂ emissions. These offsets are generated by projects that reduce emissions or remove carbon dioxide from the atmosphere, such as renewable energy projects or reforestation initiatives. Offsets can be bought by individuals or organizations as a way to compensate for their own emissions, in order to achieve net-zero or carbon-neutral status.

The ETS (Emissions Trading System) is a type of carbon market where governments set a limit, or cap, on the total amount of CO₂ that can be emitted by certain industries and then allocate or sell emission allowances, which represent the right to emit a specific amount of CO₂. Companies can then buy or sell these allowances as needed, incentivizing them to reduce their emissions and fostering a market for low-carbon technologies and practices. The ETS is intended to be a cost-effective way to reduce greenhouse gas emissions, by giving companies flexibility in choosing how to meet their emissions targets.

Carbon markets and carbon capture can complement each other as part of a broader effort to reduce greenhouse gas emissions. Carbon capture refers to the process of capturing CO₂ emissions from industrial processes and/or power plants before they are released into the atmosphere, and then either storing it underground or using it for other purposes.

In a carbon market with a cap-and-trade system, the captured CO₂ can be counted towards a company's emissions reduction target, effectively allowing them to offset some of their emissions. Companies can also earn credits or offsets by selling the captured CO₂ to other companies for use in enhanced oil recovery or other industrial processes.

This creates a financial incentive for companies to invest in carbon capture technology, which in turn helps to reduce emissions and mitigate the impact of climate change. By integrating carbon capture into carbon markets, the cost of reducing emissions can be reduced, and emissions reductions can be achieved in a cost-effective manner.

Can blockchain help carbon markets? - https://www.youtube.com/watch?v=6PbacEHxu64