Consider the following statements : 1. Statement-I: Carbon markets are likely to be one of the most widespread tools in the fight against climate change. 2. Statement-II: Carbon markets transfer resources from the private sector to the State. Which one of the following is correct in respect of the above statements?

1. Statement-I posits that carbon markets are likely to be among the most widespread tools against climate change. Given their role in pricing carbon emissions and facilitating emission reductions through mechanisms like cap-and-trade and carbon taxes, they are indeed considered a major policy instrument globally. This statement is considered correct. 2. Statement-II suggests that carbon markets transfer resources from the private sector to the State. This can happen in certain types of carbon markets, for example, when governments auction emission allowances in a cap-and-trade system or implement a carbon tax. Thus, this statement is also considered correct in some contexts. 3. However, the reason carbon markets are seen as a key tool (Statement-I) is their potential to achieve emission reductions efficiently by creating economic incentives, not primarily because they transfer resources to the State (Statement-II). The resource transfer is a feature of some market designs, not the fundamental reason for their widespread consideration. Therefore, Statement-II is not the correct explanation for Statement-I. 4. Since both statements are correct, but Statement-II does not explain Statement-I, option (B) is the correct choice.