• Garry Jones, CEO at NovaFori


• 14.10.2021 01:30 pm
#Trading #credit

Carbon credit trading is playing an increasingly important role in supporting green initiatives and helping companies meet ambitious goals for reducing greenhouse gases. Companies from all sectors globally are lining up to purchase offsets from projects that perform activities to clean the atmosphere. 

As a result, significant growth is expected in the sector, with demand predicted to increase by 15 times or more by 2030 and by up to 100 times by 2050. In total, the market could be worth more than $50 billion in 2030. 

However, despite the environmental benefits of these projects, it is important to encourage and maintain transparency around carbon credits for buyers. 

Carbon offsetting: the benefits to businesses

Some firms in sectors such as cement production or companies which rely on oil sales, natural gas heating, or coal-fired furnaces cannot eliminate emissions completely using current technology. Yet they can begin addressing the problem and progress towards net-zero through carbon credit trading.

Alongside the environmental solution carbon offsetting provides, there are also other added benefits for businesses. 

Firstly, the use of carbon offsets can help businesses win more customers. Credits can help companies highlight their ESG credentials and improve their public relations and marketing. Not only will it help satisfy potential new investors looking to invest in an environmentally conscious firm, but it will also demonstrate a company’s commitment to its environmental responsibility more broadly. 

Secondly, company employees are becoming increasingly vocal around their employer’s carbon emissions. Indeed, three quarters (75%) of millennials want their employer’s values to match their own, while just less than two thirds (62%) want to be known for making a positive difference in the world. As millennials now make up the largest segment of the workforce, it is vital companies take their opinion into consideration. 

Carbon credit markets and certified gold standards

Clearly, transparency is needed in the industry to ensure the amount of carbon slated to be removed from the atmosphere matches that which is removed in practice. 

As a result, there are some accepted standards, including the gold standard and verra, which certify each carbon credit project’s validity and adherence to the requirements of their respective methodologies. Alongside these accreditations includes The Voluntary Carbon Markets Integrity Initiative (VCMI), that aims to ensure offsets are underpinned by positive actions. 

However, despite this, those purchasing carbon credits often do not have transparency on the progress that the underlying carbon reduction project is making which they have paid to support. Additionally, voluntary carbon credits are generally purchased over the counter, meaning there is limited transparency on market data such as transaction volumes and price levels. 

To address the issue of transparency in the market, Climate Impact X (CIX) will launch a new global carbon exchange, an online marketplace. The platform, which NovaFori will support CIX to deliver, will use online market-place technology and provide global access in the purchase of trusted carbon credits.

Future of the industry

It is clear that carbon credit trading is having a positive impact on meeting environmental goals, however, more must be done to provide transparency for buyers. By developing a marketplace with standardised, tradeable products and contracts, CIX will increase not only transparency but liquidity and the scale of transactions – and help to accelerate the emergence of a greener world.