Development of a Trusted and Efficient Sustainable Goods
Market
Name
grabowski-agrabows-sm-sdm-2026-thesis.pdf
Size
5.68 MB
Format
Adobe PDF
Checksum (MD5)
7a8afc801bb228ff16612e12c63375a1
Author(s)
Grabowski, Andrew
Advisor(s)
Zardini, Gioele
Date Issued
February 2026
Publisher
Massachusetts Institute of Technology
Abstract
The aviation sector is recognized as a hard-to-decarbonize industry due to the high costs associated with deploying emission reductions. Corporations seeking to reduce their carbon liability participate in compliance and voluntary carbon markets. These markets are often structured around the Greenhouse Gas (GHG) Protocol’s three-scope framework. In the GHG Protocol, direct (Scope 1) and indirect (Scope 2 & 3) emitters share parallel responsibility for the same emissions. This parallel ownership structure includes multiple entities that account for a single emission in their carbon accounting. These entities then purchase emission abatements, such as sustainable aviation fuel, to reduce their emission liability. This thesis examines how the management of parallel ownership of emission abatements can be improved through effective market design. The research explores the development of an auction framework with an aggregate reserve price that enables multiple responsible entities to jointly purchase emission abatements. This auction is then shown to be dominant strategy incentive compatible, incentivizing entities to bid their true value of the good in hopes of building trust in the market. The research results indicate that although the aggregate reserve auction may yield lower expected revenues than a revenue-maximizing approach, it offers a reliable method for cost-sharing among responsible entities. The contribution of this research is to inform market designers about the unique joint purchasing properties of emission abatements and potential market mechanisms that reflect these properties. The study offers guidance on the design levers that can support efficient and trusted markets for sustainable aviation fuel and other sustainable solutions.
MIT Department
Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
System Design and Management Program.
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