For the first time, climate change performance is more than just a statement that goes into the environmental report. Companies have real targets to meet, with real penalties to pay if they fail to meet them. Understanding the carbon and renewable energy markets will be essential to managing the risks that companies face in meeting these new climate change targets. This paper provides an outline of the Emissions Trading Scheme as well as the Renewables Obligation Certificate (ROC) market. The article outlines how the markets operate, what drives the price that companies will have to pay and issues that companies need to understand when considering their compliance strategies.