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Abstract
Climate change is an important environmental issue for this generation. Carbon dioxide, the most predominant greenhouse gas, can remain in the atmosphere for decades or even centuries. Voluntary carbon markets are an important tool to mitigate climate change. However, carbon prices have been steadily decreasing, so it has become cheaper to pollute, reducing the incentive for polluters to assume alternative production methods. The objective of this article is to identify factors that affect carbon prices. This study employs multivariate ordinary least squares regression to examine the relationship between the prices of nature-based carbon offset futures contracts and various macroeconomic, financial, market, and policy factors. The results suggest that the prices of carbon offsets are positively correlated with the carbon efficiency of businesses index. Conversely, carbon offset futures prices exhibit a negative correlation with green bonds, the S&P 500 index, and the three-month Treasury bill secondary market rate. The findings indicate that green bonds and carbon offsets are possible substitutes. The results present insights for future policies that promote a well-functioning voluntary carbon market.