My favorite proposed implementation is blockchain based - Bitcoin Hivemind. It’s a general purpose prediction market but I’d want to use it for pollution in particular.
Basically you can bet on whatever you want. Whatever it is, there’s someone betting against you. Most people want insurance against bad things - so they’d bet on rising sea levels, hurricanes, etc in their region. The insurers (those betting the bad thing won’t happen) now have an incentive to hedge their risks and bet on what causes those bad things (global CO2 levels).
So ultimately, buying insurance against your house going underwater would create an incentives for other users to do things to reduce pollution. How well this can actually work would depend on total transaction costs being very low, because there’d be several prediction markets between Caribbean hurricane insurance and the pollution prediction market for some factory in Ohio.
I hope that polluters rationally decide to cooperate peacefully, bet against pollution themselves, and then voluntarily reduce it. But if they don’t, then someone else can reduce their emissions and get paid anonymously. It’s the same mechanism as Jim Bell’s assassination politics, but I think killing the physical sources of pollution would be more productive than killing people.