Carbon Credits

Permits and offsets that price emissions, traded under compliance caps and voluntary standards.

Overview

Compliance markets cap and trade: the EU system, the largest, forces power, industry, and aviation to surrender allowances whose price rose from single digits toward 100 euros a tonne, pushing coal off the margin. California with Quebec, the UK, Korea, and the American northeast power sector run the others, and China runs an intensity based national market. Allowances are government creations, while offsets, avoidance and removal projects from forests to direct air capture, trade voluntary against standards that have faced integrity scandals and reformed methodologies. Futures on the European contract trade openly, and international linkages build under the Paris Agreement. A credit is worth what enforcement says it is.