Consider the following statements:
- 1. Carbon markets are likely to be one of the most widespread tool in the fight against climate change.
- 2. Carbon markets transfer resources from the private sector to the State.
Which of the statements given above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC CAPF – 2010
– Statement 2: Carbon markets often involve mechanisms like auctioning emission permits (in cap-and-trade) or imposing a direct tax on carbon emissions (carbon tax). In both these common scenarios, resources (money) are transferred from the private sector (companies that emit carbon) to the state (government) in the form of revenue from auctions or taxes. While private entities also trade permits among themselves, the regulatory framework and revenue generation for the state are key features of many carbon market implementations.
– Revenue generated from carbon markets can be used by governments for various purposes, including funding green initiatives, providing tax relief, or direct redistribution to citizens.
– The effectiveness and design of carbon markets are subjects of ongoing debate, but they remain a prominent policy tool under consideration and implementation globally to meet climate targets.