Carbon market refers to the market that manages and reduces greenhouse gas (mainly carbon dioxide) emissions by buying and selling carbon emission rights. The purpose of carbon market is to encourage the reduction of greenhouse gases such as carbon dioxide by establishing economic incentive mechanism to meet the challenges of climate change and global warming.

The core mechanism of carbon market is to allocate greenhouse gas emission quotas to enterprises, organizations or countries, and call these emission quotas carbon emission rights or carbon trading vouchers. Enterprises, organizations or countries can buy and sell carbon emission rights according to their own emission needs. If an entity's emissions are lower than its carbon emission rights, it can sell the excess emission rights to other entities that need to increase emission quotas; On the contrary, if an entity's emissions exceed its carbon emission rights, it needs to buy additional emission rights to make up the difference.

There are two main modes of carbon market operation: emissions trading and carbon tax. In emission trading, carbon emission rights are bought and sold in a fixed quantity, and the price is determined by market supply and demand; Carbon tax is a tax levied according to the carbon content of each unit. The goal of these mechanisms is to provide economic incentives for enterprises and industries to reduce greenhouse gas emissions and promote the development of low-carbon economy.

The carbon market has been widely used around the world, including the European Emissions Trading System (EU ETS) of the European Union and the carbon market pilot projects in some countries and regions. By establishing a carbon market, we can promote greenhouse gas emission reduction, achieve sustainable development, and provide flexible, economical and effective solutions to climate change.