Carbon Finance is a buzzword in this new era. Recently, it has got much value.

All the developing, developed or underdeveloped countries, are focusing on this issue. The study of this issue is also emphasizing as this has been part of Finance. Though the issue was not important earlier but it has got much emphasize because of climate and environmental change in the world. Besides, the world is getting much more unsustainable because of pollution, emission of gas to the environment. So the topic has become an essential part to study. Carbon markets have been a key driver of channeling finance and investment to projects that reduce greenhouse gas emissions in developing countries since 2005 (International Finance Corporation). Annex I countries are industrialized and developed countries. They uses different machine to produce product and export that to other country. To the way of their development, they emit different gas to the environment. This emission causes not only they are suffered but also developed, developing or underdeveloped countries also suffer more. But matter of fact is that these later countries are not responsible to create this hazardous gas to the environment. For this reason, companies and governments of Annex I countries buy greenhouse gas emission reductions in development countries to trade their produced product on the market for a potential profit. Emission reductions are measured in tons of carbon dioxide. Different clean development mechanism has been undertaken to reduce the problem of greenhouse gas from the affected countries and the ways are renewable energy projects like wind, solar hydro, biomass etc. Moneys are transacted from the government and companies of Annex I countries to the affected countries through the Clean Development Mechanism which is widely known as Carbon Finance. It can help to avoid restriction that are imposed against the projection of development and implementation and this will be possible through improving access to financial resources, enabling transfer of technologies etc. Through this process, public and private investment are leveraged specially in the developing countries, as a result, greenhouse gas emission are reduced through the mitigation of climate change with the process of sustainable development. Different kinds of measurement have been taken for the Carbon Finance for the recent years. World Bank has its own Carbon Finance Unit (CFU). This CFUs carbon fund purchases the emission reduction on behalf of the contributors and for this it follows two framework of Kyoto Protocol: a. Clean Development Mechanism (CDM) and Joint Implementation (JI). It is also a supportive of Program of Activities (PoA) development. World Bank is one which has recently designed a new pay for performance methane facility to reduce methane emissions and deliver climate finance in an innovative way. For this reason, a proposal of auction has been introduced and that is put option through which resource allocation and ensure of maximum leverage of private capital will be possible.

There are many steps that are being taken to reduce gas that effect the environment. However, the study of Carbon Finance will help to reduce it from environment and enrich knowledge to the student so that they can spread their knowledge to society and get a sound world.