The correct option states that both Statement-I and Statement-II are true, but Statement-II does not explain Statement-I. This is accurate because carbon markets, which function through mechanisms like cap-and-trade systems, incentivize emissions reductions by allowing businesses to buy and sell carbon credits, fostering private sector participation in climate action. However, while these markets may generate revenue that can be utilized by the state, their primary intention is not to transfer resources to the state but to create a financial framework that encourages emissions reduction through market dynamics. Thus, the relationship between carbon markets and the state is more about regulatory oversight than direct financial transfer, making the two statements distinct yet both true.