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Carbon Markets

Carbon Markets are places where carbon emissions can be traded. By limiting the amount of emissions with a “cap” (at the state or corporate level), carbon emissions can be traded among entities (corporations or countries). The markets come in two flavors: voluntary (NGO run) and regulatory (government run).

BloombergNEF projects ran two market scenarios: a lax, voluntary only market or a removal only market. The former results in slow growth of carbon prices through 2050. The later results in a spike in carbon price to $200/ton, this environment resembles a carbon tax environment12. S&P Platts produces as assessment of carbon markets. Control Period (CP) is a term to denote the various phases of the project, often shifts in scope or allocations3. Similarities in market definitions allows fungibility of credits across the marketplace, particularly some CDM related credits 3.

In Carbon markets, removal credits and community-based projects will likely trade at a price premium4.

Major Regulatory Markets

There are two excellent maps of ETS markets, both considered and implemented. One can be found at International Carbon Action Partnership and another at the Carbon Pricing dashboard by the World Bank.

Supranational

National

Subnational

Major Voluntary Standard Setters

Project Developers

  • Setup projects that create carbon credits
    • Carbon credits have a vintage (issuance) and delivery date (when the credit is available to the market)4.

Retail Traders

Exchanges

  • New York-based Xpansiv CBL created the Nature-based Global Emission Offset (N-GEO) for a standard credit.
  • Singapore based AirCarbon Exchange (ACX) created Global Nature Token for a standard credit.

References

1.
Veronika Henze. Carbon Offset Prices Could Increase Fifty-Fold by 2050. Bloombergnef (2022).
2.
3.
Borghesi, S. & Montini, M. The Best (and Worst) of GHG Emission Trading Systems: Comparing the EU ETS with Its Followers. Frontiers in energy research 4, (2016).
4.
5.
Improved Forest Management Methodology for Quantifying GHG Removals and Emission Reductions through Increased Forest Carbon Sequestration on Non-Federal U.S. Forestlands. https://americancarbonregistry.org/carbon-accounting/standards-methodologies/improved-forest-management-ifm-methodology-for-non-federal-u-s-forestlands.