Compliance Carbon Market (CCM)

What is the Compliance Carbon Market (CCM)?

The compliance carbon market is an instrument for achieving climate targets by creating a financial incentive for companies to reduce their emissions and invest in clean technologies. In the EU, a compliance carbon market was introduced in 2005 with the European Emissions Trading Scheme (EU ETS). Since then, certain companies, such as chemical companies, have been legally obliged to purchase emissions certificates to offset their emissions. If they are unable to reduce their emissions, they must purchase the corresponding certificates in order to comply with their emission limits.

The compliance carbon market is based on the "cap and trade" principle, in which a steadily decreasing upper limit (cap) is set by governments and certificates are distributed or auctioned (trade) to companies that cause particularly high emissions. The resulting market for emission rights allows companies that are particularly efficient and reduce emissions to sell carbon credits to other companies.

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