Kyle Meng, UC Santa Barbara

Paper: How much do carbon markets cut emissions? Global evidence from compliance market auctions

Abstract: Global adoption of compliance carbon markets is growing. Yet their aggregate emissions impact remains poorly understood as the markets’ broad coverage and spillovers render standard quasi experimental methods inapplicable. This paper develops a method for recovering a causal lower bound on aggregate emissions abatement and abatement cost using allowance auction data, which can reveal aggregate emissions demand at counterfactual prices. I apply these bounds to 11 compliance carbon markets, covering 4.6% of global fossil emissions. I find these programs have cumulatively reduced global emissions by at least 2,215.5 million tons, or 7.0%, equivalent to 45% of recent annual U.S. fossil emissions. The global abatement cost lower bound is $61.48 billion (2025 USD), or 0.0133% of total jurisdictional GDP.