Carbon Markets: Overview and Types
What are carbon markets?
Carbon markets enable the trading of verified emission reductions (carbon credits) to incentivize climate action and accelerate decarbonization. These include compliance markets (regulated by governments) and voluntary markets (driven by companies and individuals).
Sentinel Earth is a full-stack carbon market actor — from project origination and certification to credit commercialization and buyer advisory.
What is the voluntary carbon market (VCM)?
The VCM is where carbon credits are traded outside government mandates — enabling companies to meet sustainability goals through climate finance.
Sentinel Earth is a vertically integrated player in the VCM — managing everything from project development to matching credits with credible demand.
What are compliance-grade carbon credits?
These are credits eligible for use in regulatory systems (e.g. CORSIA, Article 6). They meet specific quality and authorization criteria.
Sentinel Earth originates and tracks credits with compliance potential, and advises buyers on eligibility pathways under evolving rules.
What is the carbon market's role in net-zero?
Carbon markets are not a substitute for decarbonization — but they are critical for neutralizing residual emissions and financing climate solutions.
Sentinel Earth helps companies build science-aligned, credible net-zero strategies — grounded in deep cuts and high-quality credits.
What is carbon market liquidity?
Liquidity refers to how easily carbon credits can be bought or sold without affecting price. It’s higher in large, standardized markets like the EU ETS.
Sentinel Earth helps buyers and sellers navigate both liquid and illiquid markets — ensuring fair pricing, timing, and risk management.
What is Compliance Market?
A compliance market is a government-regulated carbon market where covered entities must surrender allowances or offsets to meet mandatory emission reduction targets, with non-compliance resulting in penalties or legal consequences.
Sentinel Earth helps organizations understand compliance market obligations and opportunities, structuring projects that qualify for regulatory programs while maintaining voluntary market optionality.
What is Voluntary Market?
The voluntary carbon market is where buyers voluntarily purchase carbon credits to meet sustainability goals, climate commitments, or corporate responsibility objectives, operating without government mandates but increasingly guided by quality frameworks like ICVCM and VCMI.
Sentinel Earth operates across the voluntary carbon market, developing projects, structuring transactions, and advising buyers on credit selection that aligns with net-zero strategies, SBTi guidance, and emerging integrity standards.
What is Spot Market?
The spot market is a carbon credit trading market where credits are bought and sold for immediate delivery and payment, with prices determined by current supply and demand rather than future expectations.
Sentinel Earth helps buyers access spot market opportunities for immediate credit procurement while balancing spot purchases with forward contracts to manage price risk and ensure supply continuity.