Carbon Market Simulator

In our Draft Proposal for a Unified Carbon Market brief, we used a simple model to illustrate market dynamics, with the following assumptions:

the market covers high-income country firms that emit 10 gigatonnes CO₂e/year and optionally emerging market and developing economy firms that emit 5 gigatonnes CO₂e/year in 2025
mitigation costs in high income countries are 100 USD/tCO₂e in the initial year
mitigation costs in emerging market and developing economies are 30 USD/tCO₂e in the initial year
mitigation costs fall 5% annually in both types of economy
firms are initially allocated tradable permits equal to their initial-year emissions, and permits are tapered to achieve zero emissions for the combined market in 2050

We think these assumptions are broadly plausible, but they are mainly illustrative. This calculator allows you to explore dynamics under alternative assumptions.

Start Year:

Net Zero Year:

Number of Firms:

Emissions per Firm in Initial Year (tCO2e):

Mitigation Cost in Initial Year ($/tCO2e):

Mitigation Cost Reduction Rate: