Compliance Carbon Market
A market where regulated entities must surrender allowances or approved carbon units to meet legally binding emissions limits. Examples include the EU Emissions Trading System, the UK ETS, and China's national carbon market.
Why the compliance carbon market matters for carbon credit buyers
Compliance markets and the voluntary market are separate systems trading different instruments: compliance schemes mostly trade allowances issued by a government, while the voluntary market trades project-based credits. Prices are not comparable between the two, and most voluntary credits cannot be used to meet a regulatory obligation. The boundary is blurring, though: some schemes accept a limited share of project credits, and CORSIA is a compliance scheme built entirely on them. Buyers should confirm which market a credit is eligible for before assuming it satisfies a legal requirement.