Environment › Climate negotiations and finance

Climate finance, carbon markets and carbon pricing

Climate money and the price of carbon: the funds and goals for climate finance, green bonds and what may be counted green, carbon markets, and border taxes on carbon. Prelims has asked about carbon markets under Article 6 of the Paris Agreement and about a bond that funds both environmental and social projects.

UPSC has asked

Prelims 2025: Article 6 of the Paris Agreement and carbon markets
Prelims 2023: carbon markets as a tool against climate change

No subject here changed from 16 to 31 July 2026.Show all

CBAM: Carbon Border Adjustment Mechanism: a charge on the carbon emitted in making an imported good, so that it carries the same carbon cost as one made inside the importing bloc.

Carbon leakage: The shifting of production, and of the emissions that go with it, to countries with weaker climate rules, in response to a carbon price at home.

Sovereign green bond: Government debt whose proceeds fund environmentally sustainable projects, so it is classified by who issues it and by what the money is spent on.

Greenium: The yield discount investors accept on a green bond against a comparable conventional bond.

Basis point: One hundredth of a percentage point, the unit in which bond yields are compared.

SHANTI Act: The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, the law India's nuclear expansion runs under.

Transition finance: Funding that helps a high emitting activity cut its emissions, where the activity is not green itself but is moving that way.