Which one of the following is correct in respect to the Carbon markets?

Statement 1 is accurate: Carbon markets, once considered ineffective, have finally emerged as one of the most prominent mechanisms in the battle against climate change. By the end of 2021, over 21% of global emissions were subject to some form of carbon pricing, an increase from 15% in 2020. More and more businesses are required to compensate regulators for the privilege of emitting a ton of carbon dioxide. Investor interest is also rising, as trading volumes in these markets surged by 164% last year, reaching €760 billion ($897 billion).

Statement 2 is also accurate. Carbon markets play a crucial role in mobilizing financial resources and minimizing costs, thereby providing countries and corporations the flexibility to transition to low-carbon economies. It is projected that carbon credit trading could lower the expense of fulfilling Nationally Determined Contributions (NDCs) by over 50%—potentially saving as much as $250 billion by 2030. In the long run, however, carbon markets may become obsolete as countries achieve net-zero emissions, reducing the necessity for emission trading.

Therefore, the correct answer is Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I.