A regulator issues a fixed cap of tradeable carbon credits (one credit ≈
one tonne CO₂). Sellers hold surplus credits from emitting less than
their allowance; buyers who overshoot must purchase credits to comply.
Price is set where supply meets demand — squeeze the cap and the same
buyer pool competes for fewer credits, driving price up.
price ≈ base_price × (demand / cap)^1.6
trades/sec ∝ min(supply, demand) × trade_speed
cumulative_offset += credits_traded (each credit retired = 1 t CO2 not emitted)
- Emissions cap — total credits issued this period (green cubes waiting in the supply pool, left).
- Buyer demand — how many buyer agents (blue capsules, right) are actively seeking credits.
- Trade speed — how fast matched trades execute, sped up for visualisation.
- Presets — Loose cap (oversupply, low price), Balanced, Tight cap (undersupply, price spike) — the three regimes real compliance markets cycle through as regulators ratchet the cap down over time.