In Europe, the carbon market overseen by the EU generated €57 billion ($59 billion) in revenue over the past 8 years, and prices paid to farmers are flirting with $100 per metric ton. 

Analysts suggest a carbon price of $150 per metric ton might not be out of question for the UK’s Bank of England carbon market. 

In California, on the other hand, companies seeking to reduce environmental impact could pay at auction as little as $18.69 for a ton of captured carbon.

Understanding the difference among these prices — and the number on the carbon contract you may be about to sign — requires understanding the short history of carbon markets in the United States.

A Brief History

The idea of capturing carbon dioxide (CO2) in the ground stems from at least 1977. Rather than on a farm, it started on an American oilfield.

Workers at a natural gas main piped CO2 into nearby oil wells to squeeze oil out of otherwise unreachable deposits. The process known as Enhanced Oil Recovery is still used today.

The idea of addressing CO2 globally arose when leaders from UN member states met in Rio in 1992 to develop a climate plan in accordance with 1989 General Assembly resolutions to address rising sea levels caused by climate change.

The 1990s saw the Payments for Environmental Services Program develop in Costa Rica. The program paid landowners to preserve existing forests and grow new ones. The program’s initial target was severe deforestation, which saw Costa…