# Voluntary and compliance carbon markets: what's the difference

> How the voluntary carbon market differs from the compliance market: who buys units, who sets the rules, and how allowance trading, CBAM and Article 6 of the Paris Agreement fit together.

Source: https://7g.carbonplatform.asia/en/kb/voluntary-and-compliance-markets

A compliance carbon market is created by the government: companies have to comply with emission requirements and use allowances or eligible units to do so. The voluntary carbon market works without such obligations: companies buy carbon units to support climate projects and to back up their claims. There, the rules are set by independent programs and quality initiatives.

## Compliance market

The main forms of regulation are:

- **Emissions trading system (ETS).** The government sets an overall emissions cap for sectors and allocates or sells allowances. A company surrenders an allowance for every tonne it emits; it can sell any surplus and buy more if it falls short. One example is the EU system (EU ETS).
- **Carbon tax or levy.** A fixed charge per tonne of emissions.
- **Border mechanisms.** The EU CBAM (Regulation (EU) 2023/956) requires importers of certain goods to buy certificates covering their embedded emissions; any carbon price already paid in the country of production is taken into account. For details, see [CBAM: what it is and who it affects](https://7g.carbonplatform.asia/en/kb/what-is-cbam).
- **Trading between countries under Article 6 of the Paris Agreement.** Countries transfer mitigation outcomes (ITMOs) to one another to meet their nationally determined contributions (NDCs). See [Article 6](https://7g.carbonplatform.asia/en/kb/paris-agreement-article-6).

An allowance is a permit to emit, whereas a carbon unit confirms a reduction or removal. Project units can be used in a compliance system only where its rules expressly allow it.

## Voluntary market

In the voluntary market, units are issued by independent programs such as Verra (VCS), Gold Standard for the Global Goals and others. The buyers are companies that want to offset their residual emissions or finance projects outside their own value chain.

Since there is no mandatory oversight, integrity initiatives play a key role:

- **ICVCM** and its Core Carbon Principles, used to assess programs and categories of units (see [ICVCM CCP](https://7g.carbonplatform.asia/en/kb/icvcm-ccp));
- **VCMI** and its Claims Code of Practice v3.0 (April 2025), which sets the rules for credible corporate claims.

## Comparison

| Feature | Compliance market | Voluntary market |
|---|---|---|
| Basis | Law, international agreement | Company decision |
| Who sets the rules | Government, UN | Independent programs |
| Main instrument | Allowances, eligible units | Project carbon units |
| Buyer's motive | Meet an obligation | Claims, strategy, reputation |
| Cost of a mistake | Fines, sanctions | Greenwashing risk, reputation |

## Where the markets converge

The lines are blurring. The UN mechanism under Article 6.4 (PACM) issues units that can be used by both countries and companies. National registries, for example in Uzbekistan, are being set up to take part in the international carbon unit market. Voluntary standards are updating their requirements: Verra VCS Version 5 becomes mandatory for most new projects from January 1, 2027, and Gold Standard is releasing tools aligned with Article 6.4 requirements.

For a project owner, this means the same monitoring data has to stand up to stricter rules: a transparent baseline, immutable records and independent verification.

## How it works in the platform

- The platform currently runs the GHG contour: Scope 1, 2 and 3 emissions are recorded for each facility month by month, with supporting documents, in [Data entry](https://7g.carbonplatform.asia/data-entry). This kind of corporate accounting is needed whichever market the company later operates in.
- The Market, CBAM and MRV contours are marked “Soon”: they are under development.
- Official documents for each mechanism are collected in the [regulatory map](https://7g.carbonplatform.asia/en/kb/documents).

## Frequently asked questions

### Can voluntary market units be sold into a compliance system?

Only if the rules of that particular system expressly allow such units and the units meet its requirements. Many emissions trading systems do not accept external units at all or restrict their use.

### Does a company need to take part in the market if it has no obligations?

No. But corporate emissions accounting pays off either way: buyers, banks and partners ask for it, and for exporters to the EU it becomes the data foundation for CBAM.

### Which market is more reliable?

Reliability depends not on the type of market but on the quality of the methodology, independent verification, registry transparency and the absence of double counting.