Climate change is the major challenge of the 21st century. In order to mitigate global warming
atmospheric carbon dioxide has to be reduced dramatically. Via instruments designed by the soon
expiring Kyoto Protocol and different other measures the international community aims to
realise this carbon reduction. Experts speak of carbon markets. Where companies organisations
and individuals are seeking to neutralise their carbon footprints financial actors are making
enormous profits. But whom does this market really serve? Economy environment or both? This
study intends to increase the understanding of such markets and to analyse strengths and
weaknesses for defining possible quality actions. Firstly an overview of presently existing
and developing carbon markets their differentiation and locations will provide basic
comprehension of the current status of carbon trading. Questions about the role of the US or
developing nations like China and India will be answered. Who is forerunner in this market?
Afterwards this work will concentrate on non-binding or so called voluntary carbon
transactions. The reader will learn about the supply structure of non-compliance carbon trading
and market drivers. Major project types will be discussed as well. Furthermore the question
will be raised if offsetting or voluntary carbon trading has an effect on global warming if it
improves the situation - or not. After analysing market structures and participants motivations
the author will have a closer look on criticism and markets weaknesses before introducing
quality mechanisms. What instruments will open the carbon market for mainstream participants?
Which structural changes are necessary to enhance quality in this nascent market? An outlook
will be given on how the voluntary carbon market most probably develops. Finally the reader
will be acquainted with voluntary carbon markets and may decide weather or not they are an
option to counteract climate change the major challenge of the 21st century.
