Understanding carbon markets: compliance, voluntary efforts, and technological innovations

As global regulations tighten and carbon pricing becomes more volatile, companies are being forced to rethink their carbon strategies. In this three-part series, Dashmeet Kaur, Content Strategist, ION Group brings together four experts from the Hellenic Association of Treasurers (HAT) and industry-leading organizations to share insights on how companies can effectively navigate the evolving carbon markets:

• Yannis Lefas – Assistant Treasurer at GasLog and Head of Shipping Treasury at HAT, specializing in shipping finance and risk management.
• Dimitris Stamoulis – Head of Corporate and Shipping Sales / Global Markets at Eurobank focusing on financial solutions for shipping clients.
• Apostolos Androutsopoulos – Sr. Treasury Analyst at JERA Global Markets, with expertise in carbon credit trading and hedging strategies.
• Sourabh Verma – Head of Product Marketing and HATT at ION Group, providing insights on financialization and emerging ESG-linked products.

From the basics of carbon markets to the operational challenges in the shipping sector and the evolving role of treasury in managing carbon credits, this series offers practical strategies and real-world examples from industry experts.

In this first instalment, we dive into the fundamentals of carbon markets, exploring the differences between compliance and voluntary systems and the role of emerging technologies. We’ll uncover how companies can strategically leverage carbon credits to meet both regulatory and voluntary sustainability targets.

What are carbon markets?

Dashmeet: Dimitris, can you explain the concept of carbon markets and how they work?

Dimitris: Carbon markets facilitate the trading of emission permits to regulate greenhouse gas emissions. The primary aim is to help individuals, companies, and nations achieve their climate goals, whether that’s at a local or global level. Essentially, they allow the buying and selling of the right to emit a certain number of greenhouse gases, enabling participants to manage their carbon footprints effectively.

For instance, in compliance markets like the European Union Emissions Trading System (EU ETS), companies are legally mandated to participate and purchase allowances to cover their emissions. On the other hand, voluntary markets enable organizations to invest in carbon offsets, often driven by Corporate Social Responsibility (CSR) goals.

Compliance vs. voluntary carbon markets

Dashmeet: What’s the difference between compliance and voluntary carbon markets, and why do we have these two approaches?

Sourabh Verma: The distinction lies in regulation. Compliance markets, such as the EU ETS, are mandated by law and primarily target industries with high emissions, like energy and manufacturing. Companies must purchase allowances or credits to remain compliant with regulations. Voluntary markets, however, are driven by organizations’ sustainability goals—not legal requirements—allowing them to offset emissions by supporting projects like reforestation or renewable energy.

Both systems are essential. Compliance markets ensure accountability and drive systemic change, while voluntary markets empower organizations to go beyond regulations and demonstrate environmental leadership.

Carbon credits vs. carbon offsets

Dashmeet: How are carbon credits different from carbon offsets, and how do they contribute to sustainability goals?

Apostolos: Carbon credits and carbon offsets are often used interchangeably, but they serve different purposes. A carbon credit is a tradable certificate representing one metric ton of CO2 reduction or removal. These credits are critical in compliance markets, where they act as permits for emissions. Once used, they are retired and can no longer be traded.

Carbon offsets, on the other hand, are voluntary actions that compensate for emissions by funding projects that reduce or sequester greenhouse gases elsewhere. Both tools are instrumental in helping organizations achieve their sustainability goals, whether through compliance or voluntary action.

The role of technology in carbon markets

Dashmeet: What technologies are companies using today to manage carbon strategies more effectively—and how are these helping them meet compliance or voluntary goals?

Sourabh Verma: There’s been a shift toward more practical, integrated tools for managing carbon exposure more effectively—especially as both regulatory requirements and voluntary commitments become more complex. The need now is for platforms that not only track emissions, but also support decision-making around credit purchases, compliance reporting, and long-term sustainability planning. For example, ION’s Carbon Zero provides companies with a centralized way to monitor emissions, manage carbon credits, and stay aligned with multiple regulatory schemes—while also supporting voluntary initiatives. It’s this kind of integrated approach that enables organizations to move from measurement to meaningful action.

Yannis: Several innovations are transforming emissions reduction efforts. For instance, shipping companies are adopting wind-assisted propulsion technologies, like Flettner rotors, to reduce fuel consumption. Hull modifications and energy-efficient coatings are also becoming standard practices. Also, green fuels such as hydrogen and biofuels are gaining traction, aligning closely with EU ETS requirements.

These technologies not only help organizations reduce their carbon footprint but also position them as leaders in sustainable innovation.

Challenges and criticisms: navigating the debate

Dashmeet: Critics argue that carbon credits are just a way for wealthy countries to avoid real climate action. How would you respond to this?

Apostolos: It’s true that carbon credits have faced criticism, particularly around greenwashing. However, they remain a vital tool for global climate action. High-quality credits fund projects that would otherwise lack resources, such as reforestation or renewable energy initiatives in developing countries. These projects create measurable impacts and co-benefits, like biodiversity preservation and community development.

To address these concerns, organizations must prioritize transparency, invest in verified credits, and integrate carbon credits into broader sustainability strategies rather than using them as a shortcut.

Carbon markets are powerful instruments in the fight against the climate change, but their effectiveness hinges on understanding their mechanisms and applying them responsibly. By distinguishing between compliance and voluntary systems, integrating innovative technologies, and addressing criticisms transparently, organizations can drive meaningful change.

In our next blog, we’ll explore how sector-specific challenges, such as those faced by the shipping industry under the EU ETS, shape corporate strategies for decarbonization. Stay tuned. Until then check how our solutions, including Reval and Carbon Zero, empower you to manage carbon credits with enhanced confidence and regulatory compliance.