Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333925 
Year of Publication: 
2025
Series/Report no.: 
SAFE Working Paper No. 462
Publisher: 
Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
Abstract: 
We study pricing in the voluntary carbon market (VCM) using a novel proprietary dataset of sales of emission reduction certificates (credits) by a leading VCM dealer. We document extraordinary price dispersion, with carbon credits trading between a few cents and $100 per ton of CO2. Prices are systematically related to the credit project, buyer, and trade characteristics, rather than to a common value of carbon emissions. Credits from the least reliable emission reduction technologies, but with positive noncarbon externalities, are twice as expensive as trusted industrial solutions. Buyers in low-emission industries, wealthier countries, and large firms pay a premium for carbon credits, while heavy polluters and firms with explicit sustainability commitments do not. VCM pricing also features volume and client relationship discounts typical for over-the-counter markets. Finally, we document a causal link between the introduction of the VCM futures market and price premia for credits eligible for expiring futures settlement.
JEL: 
Q54
G12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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