By Muskan Naveed ISLAMABAD, Nov 04 (INP-WealthPK): The growing concern for the climate has led to newer innovations in the form of carbon markets. Nearly 15 years ago, the European Union launched the world’s first international carbon trading market. However, China’s carbon market – although launched recently – is the largest in the world in terms of greenhouse gas emissions covered. Carbon markets The Paris Agreement of 2015 is regarded as the basis for climate change policies. The nationally determined contributions (NDCs) mandated by the agreement are joint efforts by the signatories to reach carbon neutrality on a global level. While reaching NDCs is a difficult task even for the most developed nations because of the financing requirements, carbon markets have been regarded as one of the most viable solutions. Carbon markets turn carbon emissions into a commodity by giving them a price tag through carbon credits or carbon offsets. Regulated carbon markets operate with a cap-and-trade framework under which each firm is allotted some carbon credits each year. Some of these firms will have excess carbon credits which can be then sold to firms in need of extra credits. Carbon offsets are created through the reduction, capturing and sequestration, and storing of emissions and are ultimately sold to firms that want to reduce their carbon footprint. China’s carbon market  On July 16^th, trading began on China's National Emissions Trading System (ETS). This is the first nationwide effort on pricing carbon in the country but is for now limited to energy sector emitters with plans to expand its scope soon. ETS covers 4.5 billion tons of Carbon Dioxide (C02) emissions and spans over 2000 power companies responsible for 40% of the country’s emissions. China has been setting an example with its dedication towards environmental sustainability by being at the forefront of the fight against climate change. The country has pledged to work towards reducing its carbon emissions on various platforms. China committed a reduction of 40-45% in its carbon emissions by 2020 at the 2009 Copenhagen Accord. The commitment was raised to 60-65% by 2030 during the Paris Agreement in 2015. Moreover, China aims to reach carbon neutrality by 2060. The carbon market is a major step towards realizing its goals. Need for carbon pricing instruments in Pakistan  Pakistan has been regarded as the fifth most-affected country due to climate change over the past two decades (German Watch 2019) and continues to be one of the most vulnerable countries to the changing climate. The precarious position of the country calls for increased efforts to mitigate the climate crises by shifting the energy sector towards renewable resources and controlling the emissions of the manufacturing sector through carbon pricing instruments. However, the creation of a national carbon market in Pakistan itself requires heavy investment as it takes years for a country like China that is technologically far advanced than Pakistan to roll out its national ETS. Thus, access to the Chinese carbon market provides an easy alternative for Pakistan to reap benefits without incurring any costs. Moreover, China's ETS has a robust framework that will, undoubtedly, be better than the hypothetical Pakistani carbon market. China’s carbon market provides an easy way out for Pakistan to meet its nationally determined contributions of reducing emissions by 20% below the business-as-usual level. Moreover, the market can also be a channel for Pakistan to earn revenue through selling carbon offsets from projects like the Ten Billion Tree Tsunami. In conclusion, carbon markets are an efficient way of reducing carbon emissions and Pakistan can reap all the benefits of a carbon market with the help of China. The partnership can also lead Pakistan to explore other avenues in the future.