Key differences between the compliance, voluntary and sovereign carbon markets are highlighted in a new guide published by climate-focused advisory firm Climate Solutions and Simmons & Simmons, the international law firm. The guide is intended to increase understanding of carbon markets among potential participants and stakeholders, including institutional investors, by explaining terminology, outlining the offset lifecycle, listing existing participants, and reviewing legal and regulatory developments. Compliance carbon markets, such as Europe’s Emissions Trading System, are currently undergoing significant expansion and reform, while voluntary markets are also expected to increase in size – despite concerns about their transparency and credibility – with BloombergNEF estimating the total value of carbon offsets to reach US$1 trillion within the next 15 years. The guide also covers the sovereign carbon offset market, which provides a mechanism for governments to be paid by other governments and corporates for the progress that issuing countries have made in reducing carbon emissions pursuant to the Paris Agreement, by reducing or halting deforestation. “Only education can enable carbon markets to scale at pace to achieve their true climatic and economic potential,” said author Simon Puleston Jones, CEO of Climate Solutions.