The Voluntary vs Compliance Carbon Market: Key Differences
Compliance markets are required by law. Voluntary markets are chosen by buyers. Article 6 sits between them, linking the two.
Compliance markets
Compliance markets are created by law. Companies covered by a scheme must hold allowances or eligible credits for their emissions. Examples include the EU Emissions Trading System, the UK ETS and California's cap-and-trade programme. International aviation uses CORSIA, which requires airlines to offset growth in their emissions with eligible units.
Voluntary markets
In voluntary markets, companies, governments and individuals buy credits to meet their own targets or claims. Rules come from private standards and registries, such as Verra and Gold Standard, rather than from law. Quality and integrity principles for voluntary credits are set by bodies such as the Integrity Council for the Voluntary Carbon Market.
Article 6 of the Paris Agreement
Article 6 sets out rules for countries that cooperate on emissions reductions. Under Article 6, a country can transfer Internationally Transferred Mitigation Outcomes (ITMOs) to another country or to a buyer. To avoid counting the same reduction twice, the host country makes a corresponding adjustment to its own emissions record.
Why the difference matters
A credit that is valid for one market is not always valid for the other. Buyers need to know whether a unit is for a compliance obligation, a voluntary claim or a transfer under Article 6, because the rules, the documentation required and the price can all differ.