Carbon trading markets: literature review on mechanisms, accounting, and market models coupled with energy markets

To tackle the climate change, various decarbonization strategies and approaches have been adopted to achieve low-carbon transition in the energy systems. Among them, carbon pricing plays a significant role in emission reduction through the carbon trading markets. This paper establishes a unified analytical framework that connects three core components: carbon market policies and mechanisms, demand-side carbon accounting methods, and coupled energy and carbon market models. It analyzes carbon trading market policy, mechanisms, and current practices in both primary and secondary trading, which is the basis of carbon accounting and market models coupled with energy markets. Then, the carbon accounting methods in the energy systems are reviewed from the demand side to support market clearing. Based on the mechanism and accounting, the coupled energy and carbon trading market models are reviewed by market participants, scope, structure, mechanisms, and coupled operation modes, serving as the foundation of energy and carbon market coupling. By integrating insights across policy, accounting, and modeling, this paper provides a coherent basis and practical implications for designing coupled energy and carbon markets. Key research directions of carbon-energy systems are identified to support the transition toward net-zero energy systems.

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