UPSC Prelims 2023 · Question 43 of 97

UPSC Prelims 2023 question on Carbon Markets

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?

  1. Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
  2. Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
  3. Statement-I is correct but Statement-II is incorrect
  4. Statement-I is incorrect but Statement-II is correct
Show answer

Answer: A. Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

Verdict

Correct answer: Option (a).

Statement by statement

Statement I – CORRECT: Carbon markets are trading systems in which carbon credits are sold and bought. By the end of 2021 more than 21% of the world's emissions were covered by some form of carbon pricing, up from 15% in 2020. Carbon markets have become one of the most widespread tools in the fight against climate change.

Statement II – CORRECT and is the correct explanation of Statement I: Ever more businesses have to pay regulators for the right to release a tonne of carbon dioxide into the atmosphere. Like taxes, carbon markets transfer resources from the private sector to the state. Carbon markets will likely be an effective tool against Climate change. Hence statement 2 is the correct explanation of statement 1.

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