UPSC Prelims 2023 Question on –Climate Change and Carbon Trading
Q. Consider the following statements:
Statement-I: Carbon markets are likely to be one of the most widespread tools in the fight against climate change.
Statement-II: Carbon markets transfer resources from the private sector to the State.
Which one of the following is correct in respect of the above statements?
✅ Correct Answer: [B] Both Statement-I and Statement-II are correct, and Statement-II is not the correct explanation for Statement-I
Explanation:
Statement I: Correct. Carbon markets are widely regarded as an important tool for combating climate change by creating financial incentives to reduce greenhouse gas emissions.
Statement II: Correct. Carbon markets can involve financial transfers and may result in resources moving from private entities to governments through permits, taxes, or compliance mechanisms.
Carbon markets operate through the buying and selling of carbon credits or emission allowances.
However, the fact that resources may be transferred from the private sector to the State is not the reason why carbon markets are considered effective climate-change mitigation tools.
The primary reason is that they encourage emission reductions through market-based incentives and efficient allocation of mitigation efforts.
