Carbon as a Currency: Strategic Use of Carbon Trade to Spur Innovation in Nascent Markets

This thesis explores how carbon market participants turn carbon trade into a mechanism for venture financing. We examine this by studying the dynamics between suppliers, buyers, and intermediaries as they engage in forward purchase agreements. Through three in-depth case studies, we identify two strategic plays—Deficiency and Generativity—that illustrate how actors co-create financial structures to address market gaps and enable broader participation. Through Deficiency Play, buyers help address technological, institutional, and market gaps by adapting their complementary capabilities—such as verification expertise, digital infrastructure, or brand credibility—to support the supplier. Through Generativity Play, actors make financial and contractual innovations publicly available to lower entry barriers, encourage replication, and accelerate ecosystem development. Across both plays, forward trade emerges as a mechanism that substitutes for traditional innovation pathways by leveraging symbolic capital, strategic signaling, and collaborative infrastructure. By examining how early buyers communicate about their commitments, the thesis offers a novel lens on carbon-based revenue as a strategic, rather than purely environmental, investment. These findings contribute to research on entrepreneurial finance and innovation in nascent markets, while offering practical guidance for those developing and commercializing climate technologies.