Carbon credits
A tradable permit to emit, or a claim that emissions were avoided elsewhere. A market invented by policy.
The invention
The problem. Reducing pollution cheapest-first requires knowing where reduction is cheapest, which no regulator does.
The US acid rain program capped sulphur dioxide and let utilities trade allowances. It worked — emissions fell faster and cheaper than forecast — and became the template for Kyoto carbon markets. Whether the template transfers to a global, unverifiable pollutant is the open question the market is currently answering.
[Violet superimposed on image of industrial smokestacks]
1971 · Library of Congress · Public domain
Where it has failed
Not a list of disasters. A pattern library.
- 2006 & 2013European Union
Allowance prices collapse
Over-allocation twice drove EU carbon prices near zero, removing any incentive to abate.
In a market whose supply is set by policy, the political process is the fundamental. There is nothing else underneath.
- 2023Global
Offset quality
Investigations found a large share of rainforest offsets from a major certifier represented no additional reduction.
A credit is a claim about a counterfactual — what would have happened otherwise. Counterfactuals are unusually hard to audit.
Where it stands today
You now have the shape. Here is the reading.
Live from public data, pulled at request time. Read it with the failures above in mind — not because a repeat is due, but because knowing the mechanism is what lets you recognise one early.
Residential electricity price
U.S. Energy Information Administration
No data returned
U.S. Energy Information Administration needs EIA_API_KEY in your environment. It is free to obtain — see the sources screen for the link.
U.S. Energy Information Administration
In your ledger
Reaches households through electricity pricing in jurisdictions with a carbon price, usually without appearing as a line item.
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