Carbon markets use tradable instruments to create a financial value for emissions or mitigation. Compliance and voluntary markets share some terminology but serve different legal and commercial purposes.
Compliance markets
An emissions trading system sets a regulated cap and issues allowances. Covered entities surrender allowances equal to verified emissions. The cap declines over time, while trading helps participants manage the cost of compliance.
An allowance is generally permission to emit within the cap. It is not the same as a project-based carbon credit, although some systems allow limited use of approved offsets.
Voluntary carbon markets
The voluntary market issues credits from projects that reduce or remove emissions against a baseline. Companies buy these units for beyond-value-chain climate contributions, voluntary claims, internal carbon pricing or other strategic purposes.
Quality and price vary by methodology, project type, vintage, geography, durability and co-benefits.
Article 6 sits between national accounting and project finance
Article 6 enables international transfers linked to national climate accounting. It is not simply another voluntary registry. Government authorisation and corresponding adjustments add a sovereign layer.
Different instruments, different risks
Compliance buyers focus on legal eligibility, surrender dates and regulatory price exposure. Voluntary buyers focus more heavily on project integrity, claims and reputation. Article 6 buyers need both project quality and government transfer readiness.
Sentinel Earth works across voluntary markets, Article 6 and corporate insetting. See our project development services and buyer solutions.
