Carbon markets

Abstract

In this project, we comprehensively studied about the carbon markets. We performed an extensive literature study to understand what the carbon markets are fundamentally and how the carbon trade started through Kyoto protocol and a bit about Paris agreement. We studied the two types of carbon pricing mechanisms namely market based system and non-market based system. We studied about the current carbon markets present across the world, the major one being European Union Emissions Trading System (EU ETS) which is also the first major carbon market in the world. Next, we covered the emerging carbon markets. The primary carbon market covered under this section is the China Emissions Trading System (China ETS) which is also the latest carbon market in the world. We performed comparative analysis of the traditional carbon markets (for this, we chose EU ETS) and the modern carbon markets (for this, we chose China ETS). We identified some of the major challenges that are present in the carbon markets. In the last section of our report, we have provided the recommendations that as a group, we feel that address some of the challenges that we have identified earlier.