1. The carbon market has set a clear carbon price.
The carbon market sets a price for carbon dioxide by establishing a greenhouse gas (GHG) emission right market. This means that the costs caused by greenhouse gas emissions, such as the impact on public health, extreme weather and the extinction of specific animal or plant species, will become obvious. These costs can be incorporated into the prices of goods and services through the carbon market mechanism. The determination of carbon price enables the polluter pays principle to be implemented.
2. The carbon market mechanism limits the upper limit of carbon emissions.
In the carbon trading system, the government sets a clear carbon emission control target, that is, the maximum allowable total emission level of all industries involved. This method can ensure the expected environmental benefits. At the same time, through the gradual decline of the total control level over time, the carbon market has sent a long-term market signal to various industries and investment institutions, providing a predictable path for emission reduction.
3. Provide flexibility: Participating enterprises can freely choose when, where and how to complete emission reduction.
The carbon market system provides great flexibility for enterprises, and enterprises can freely decide the best way to fulfill their emission reduction obligations. Enterprises can choose to fulfill their obligations by reducing their production emissions and purchasing emission quotas from other enterprises, or they can choose either way. The government usually allows enterprises to "store" unused quotas for future use. In many systems, domestic or international quotas for carbon offset projects are also allowed. These diversified choices, not only for enterprises, but also for the whole society, are conducive to minimizing the cost of the total control target in the entire carbon market.
4. The carbon market can adapt to the economic and political situation in different regions.
The carbon trading system is not static. It can adjust its system design according to different economic and political conditions in different regions and adapt to different new social needs. The carbon emissions trading system operates in different regions and levels around the world, including cities, states, provinces, countries and transnational regions. The design of carbon market in different regions has been adjusted according to their different levels of economic development, industrial and energy systems, technological level and government structure.
5. The carbon market can provide an additional source of income for the government.
The government can choose to auction carbon emission quotas to enterprises. The proceeds from the auction can be reinvested in various ways, such as subsidizing low-carbon living projects or subsidizing low-income families.
6. The carbon market can provide a series of additional benefits.
The primary goal of carbon market is to reduce carbon emissions, and a well-designed carbon trading system can bring considerable economic, environmental and social benefits. These benefits include improving air quality, gradually improving resource utilization efficiency, ensuring more energy security and creating more employment opportunities.
7. The carbon trading system can create a larger and more efficient carbon trading market through interconnection.
By linking two or more carbon trading systems, a larger carbon trading market will be created, which will bring more (and possibly cheaper) emission reduction options. When different systems are directly or indirectly connected, carbon quotas can be exchanged alternately between the two systems.