UPSC Prelims 2023 Q23: Environment & Ecology – Climate Change & Greenhouse Gases
- (a) Both Statement - I and Statement - II are correct and Statement - II is the correct explanation for Statement - I
- (b) Both Statement - I and Statement - II are correct and Statement - II is not the correct explanation for Statement - I
- (c) Statement - I is correct but Statement - II is incorrect
- (d) Statement - I is incorrect but Statement - II is correct
Answer: (b) Both Statement - I and Statement - II are correct and Statement - II is not the correct explanation for Statement - I
Explanation
Carbon markets
A carbon market puts a price on emissions so that cutting carbon pays.
| Type | How it works | Example |
|---|---|---|
| Compliance (cap-and-trade) | Government sets a cap and issues or auctions permits; firms trade them | EU ETS, China's national ETS |
| Voluntary | Firms buy carbon credits to offset emissions | Verra, Gold Standard credits |
| India | Carbon Credit Trading Scheme (CCTS), 2023 under the Energy Conservation Act | Indian Carbon Market |
Statement I — correct. Carbon pricing is spreading fast; Article 6 of the Paris Agreement sets rules for international carbon trading.
Statement II — correct, but not the explanation. When permits are auctioned, money flows from firms to the State (the EU ETS raises billions of euros). But that revenue is not why carbon markets are a widespread climate tool. They spread because they cut emissions at low cost.
Answer: (b) Both Statement - I and Statement - II are correct and Statement - II is not the correct explanation for Statement - I.
Why each option is right or wrong
- (a) Incorrect. Revenue to the State is a side effect, not the reason carbon markets are widely used.
- (b) CORRECT. Both are true, but carbon markets spread because they cut emissions cheaply, not because they move money to the State.
- (c) Incorrect. Statement II is true; auctioned permits transfer revenue from companies to governments.
- (d) Incorrect. Statement I is true; carbon markets are a leading climate tool under the Paris Agreement.
Key point
Carbon markets price emissions (cap-and-trade, offsets); auctions bring revenue to the State, but their main purpose is cost-effective cuts.
Remember
Carbon markets price emissions; revenue to the State is a by-product, not the reason they are used.
Common mistakes
- Choosing (a) because both statements are true, without checking whether II is the reason.
- Thinking carbon markets are only voluntary; compliance markets like the EU ETS are mandatory.
- Not knowing India's Carbon Credit Trading Scheme, 2023.
Exam tip
A true Statement II that is only a side effect gives option (b). Ask whether II is the purpose or just a by-product.
Sources
- Paris Agreement — Article 6
- Ministry of Power — Carbon Credit Trading Scheme, 2023
- World Bank — State and Trends of Carbon Pricing