What Does Carbon Credit Exchange Mean?
The Carbon Credit Exchange is a marketplace that allows companies and individuals to buy and sell credits for greenhouse gas (GHG) emissions. These credits are used to offset GHG emissions from industrial and other processes. Essentially, each credit equals one ton of carbon dioxide that is removed from the atmosphere.
There are a number of different exchanges that allow carbon trading. Some of these include: ACX, CORSIA, Verra, Xpansive, Plus500, and Carbon Trade Exchange.
ACX has been able to create securitized carbon.credit exchange by leveraging the latest technology of distributed ledger technology. This allows the exchange to use the speed and efficiency of blockchain to meet the needs of the market. Several standards of products are offered through the exchange. Standard products are preferred by traders. However, end buyers prefer non-standardized products. Non-standardized products are easier to inspect and offer protection from greenwashing allegations.
A number of industry sectors have joined the carbon credit exchange, including the aviation industry. The AirCarbon Exchange, for example, was launched in Singapore in 2019. It is a digital exchange that aims to simplify the process of buying and selling carbon credits. Among the organizations that have joined are airlines and oil and gas majors.
CTX is a member-only exchange that offers carbon credits that must be accredited by leading verification bodies. Large corporations pay $1995 to become a CTX member, while small companies pay $1250. To sell, members must pay a 5% transaction fee.
Other carbon credit exchanges are emerging. In fact, the International Emissions Trading Association estimates that carbon trading could save $250bn a year by 2030.
Verra is a nonprofit organization that was founded by environmental leaders. It has been credited with creating the gold standard of carbon trading. It has verified almost 796 million carbon units worldwide. The organization has an independent auditing program, registry system, and accounting methodologies specific to project types.
CORSIA, or the Carbon Offsetting and Reduction Scheme for International Aviation, is an industry-wide initiative to mitigate greenhouse gases. Airline operators participating in the scheme pledge to offset all CO2 emissions above their baseline 2019 level.
In the US, a number of industry sectors have started setting net-zero targets. As a result, the voluntary carbon market has been accelerating. Individuals, as well as companies, are looking for ways to hedge their financial risks associated with energy transition.
The Xpansive Carbon Trading Platform was launched in New York in 2007. Xpansive is a member-only exchange, and charges a 5% transaction fee when selling EUAs, which are emission allowances for air transportation. Like many other exchanges, Xpansive relies on distributed ledger technology to create a securitized carbon credit.
Another exchange, Carbon Trade Exchange, is based in Europe. Although this is not the first international exchange to offer carbon trading, it is one of the more established. Since it was founded, the company has received funding in three rounds, totaling $3.6 million.
Plan Vivo is a certification body that oversees and monitors projects to ensure that they achieve the goals set by the organization. Plan Vivo also generates results-based payments to its participants.