Every bar is a company with a fixed baseline emissions rate and a private abatement cost — what it costs that company to cut each ton of CO₂ it emits. Once a year the regulator hands out free allowances (the dashed marker on each bar) proportional to each company's baseline share of a shrinking economy-wide cap. Companies with the cheapest abatement cost cut their own emissions first (the "merit order"); everyone else keeps emitting and buys credits instead. The credit price that clears the market is set by the most expensive abatement still needed to close the gap between total emissions and the cap — exactly how the EU ETS and California's cap-and-trade system price a permit. A reforestation dial at the centre generates extra offset credits that widen the effective cap without any company cutting a single ton.
allowance_i = baseline_i · (cap / Σbaseline)
reduction_needed = Σbaseline − (cap + offsets)
price = abatementCost of the marginal (most expensive) company still needed to meet reduction_needed
- Companies — how many bars are trading in this market; more companies spread the merit order across finer cost steps.
- Cap tightening — how fast the regulator shrinks the total cap each simulated year; a faster squeeze forces more abatement and pushes the price up.
- Abatement cost spread — how differently companies are priced to clean up; a wide spread means cheap abaters absorb most of the cut while expensive ones just buy credits.
- Reforestation offsets — extra credits the forest project supplies every year, which relieve pressure on the price without any company changing behaviour.
A bar turns red when it's a net buyer (emitting above its allowance, paying the market price) and green when it's a net seller (abated below its allowance, pocketing the price on its surplus) — the price-history strip along the bottom tracks every settled year so you can see the market converge.