Twelve states run or participate in carbon markets that aim to slow climate change by forcing polluters to pay for their greenhouse gas emissions with government pollution permits.
But government permit auctions, held every quarter, aren’t the only places permits are sold.
There’s a secondary market akin to a stock exchange where the pollution permits are publicly traded by polluters and by investors betting that permit prices will rise or fall. The market fills an information void left by the quarterly auctions, signaling on a daily basis the strength of a state or regional carbon market.
Strong activity in the secondary market “shows that there’s confidence in that market,” said Luke Sideropoulos, carbon market analyst at Veyt, a Norway-based firm. It shows “more of the real-time supply and demand … [and] how people are reacting to policy expectations or news.”
