Flagship Rimba Raya Project Gets Indonesia’s OK

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The Rimba Raya Biodiversity Reserve has been validated by Indonesia’s carbon registry, the SNR.

This follows the news earlier this year when Indonesia announced it’s suspending validating carbon projects.
 

The Rimba Raya project is located in the Indonesian province of Central Kalimantan on the island of Borneo.

The area was going to be converted into palm oil plantations before being protected and is home to a rich diversity of plants, animals, and endangered species.

This is the first REDD+ carbon project to get verified by the SRN.

Rimba Raya’s Validation Details

The validation is set to begin in Jan 2023 and will cover an initial timeframe from July 1, 2019, to December 31, 2022, for a total of 9,719,928 credits (before any buffer deductions).
 
36,331 hectares under the first phase (more land to be validated separately).
Emission reductions extend until 2073
Averaging 2.65 million credits per year

Rimba Raya was the first to get validated under the Sustainable Development Verified Impact Standard (SD VISta) for hitting all of the UN’s 17 Sustainable Development Goals.

Back in August 2021, Carbon Streaming Corp announced a Carbon Credit stream agreement on Rimba Raya with the project founders InfiniteEARTH.

InfiniteEARTH revenue stream from carbon credit sales supports local community development, provincial government infrastructure, and project area protection.

According to InfiniteEARTH’s Managing Director Jim Procanik:
“We are honored to cooperate with the Indonesian government to validate Rimba Raya under Indonesia’s SRN. Working with the SRN team, auditors, and supporting personnel gives us great confidence in the future of Indonesia’s management of its carbon resources.”
The SRN & Reg 21
 
In October 2022, Indonesia’s Ministry of Environment & Forestry set out a framework for carbon trading – Regulation #21, where:
Projects within the country are to be registered, validated, and verified by the SRN.
10-20% of carbon credits issued for international offsets are to be withheld by SRN.
0-5% of carbon credits issued for domestic offsets are to be withheld by SRN.

The withheld credits will go toward Indonesia’s Nationally Determined Contributions (NDC) – as part of the country’s Paris Agreement commitment.

These credits may be released when the applicable sub-sector’s NDC targets are met.

The SRN carbon credit system follows internationally accepted standards (UNFCC guidelines) and is managed by government and non-government stakeholders and auditors.

 

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Are Carbon Offsets a Scam? Key Points to Consider

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The world’s acceleration to corporate Net Zero has come under fire. Some critics argue that carbon offsets are a scam, but there are several key points to consider in the debate. 

Firstly, carbon offsets are a legitimate and effective way for individuals and companies to reduce their carbon footprint and mitigate their contribution to climate change.
Secondly, carbon offset programs are regulated by third-party organizations that verify the validity and effectiveness of the offsets purchased. 
Lastly, carbon offset projects often provide additional benefits beyond reducing carbon emissions, such as supporting renewable energy development and improving local economies.

By definition, carbon offsets are valuable certificates that are issued when carbon is removed or prevented from entering the atmosphere. That’s done through carbon removal technologies, by pumping CO2 into rocks, or even by planting trees.

In fact, producing and selling carbon offsets is becoming a lucrative business in the U.S., and first movers have a big advantage. Small farmers, ranchers, and landowners can earn extra income by optimizing their operations to produce carbon offsets.

Carbon Offset Market Size

When checking for legitimacy of markets, following capital flows and transactions provides clues. There are two main emissions markets – the compliance carbon market and the voluntary market. 

The transaction volume in the compliance market totaled $851 billion in 2021, while the voluntary market grew to $2 billion the same year.

Source: Global Carbon Credit Corp, Corporate Presentation August 2022

The Voluntary Carbon Market is one of the fastest growing markets in global capital. It has grown from nearly $300 million in 2019 to an estimated $1.8 billion in 2022.

Corporate Footprint: Carbon Offsets and Net Zero Plans

The arguments that carbon offsets are a scam are not shared when looking at corporate net zero pledges. According to Katusa Research, the number of companies that publicly declared net zero targets reached 3,152 in November 2022.

Companies like Netflix, for example, have excellent net zero and emissions reduction plans:

“By the close of 2022, Netflix will achieve net zero greenhouse gas emissions. To reach this goal, we are working towards reducing our internal emissions by 45% below 2019 levels by 2030”

There are many other global companies that disclosed their net zero targets and how to get there. UK’s Royal Mail, Stellantis, Pfizer, Levi’s, Del Monte Foods, among many others, have pledged to hit net zero.

Companies Selling Carbon Offsets

Consider one Tesla’s sources of revenue (and profit) has been the sale of carbon offsets. In Q1-2022 for example, Tesla earned $679 million in carbon credit sales.

A company that emits a certain amount of carbon dioxide through its operations can offset those emissions by buying carbon credits. They come from a project that reduces carbon emissions elsewhere, such as a renewable energy project.

Offsetting allows the company to neutralize its carbon emissions and reduce its overall impact on the environment.

Carbon Offset Regulation

A farmer can’t just create thousands of carbon offsets from his or her land by planting trees. There is a stringent carbon verification process and typically performed by one of the larger global services – like Verra and Gold Standard.  

Carbon offset programs are regulated by third-party organizations that verify the validity and effectiveness of the offsets purchased. For example, the Carbon Offset Integrity Standard (COIS) is an international standard that ensures carbon offset projects are real, permanent, and additional. 

This means that the offsets purchased represent real, verifiable reductions in carbon emissions, and that the reductions would not have occurred without the offset project.

Verified carbon offsets are definitely not a scam. Let alone the benefits they offer that can be environmental, social, and economic.

Extra Benefits of Offsets

Carbon offset projects often provide additional benefits beyond reducing carbon emissions.

For example, many carbon offset projects support the development of renewable energy, such as wind and solar power. This not only reduces carbon emissions, but also helps to diversify the energy mix and reduce reliance on fossil fuels. 

In addition, carbon offset projects can also provide economic benefits to local communities by creating jobs and supporting economic development. For instance, a carbon offset project may involve planting trees in an area where employment is scarce, providing employment  opportunities and supporting the local economy.

With all these points, can we still say that carbon offsets are a scam? We don’t think so; not all carbon offsets are a scam even if some of them may be. 

Otherwise, the BMO would not be confident in projecting that the market will grow 17.4x by 2050, relative to its 2020 traded volumes. And as more players and money are flooding the voluntary carbon market, its value seems to grow even more.

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Climate Commitment from Four Major Banks Reach $5.5 Trillion

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The banking industry stands out from other sectors in its capacity to help firms transition to a low-carbon economy through the major banks’ $5.5 trillion climate commitment to finance and invest in sustainable projects.

In a report by the International Energy Agency, investments in new coal mines, oil and gas wells had to end immediately for the world to meet its Paris climate goal of limiting warming to 1.5 degrees Celsius.

Yet, fossil fuel financing from the world’s biggest banks amounted to $4.6 trillion U.S. dollars in the 6 years since the 2015 Paris agreement. $742 billion was for fossil fuel financing in 2021 alone.

At the COP27 summit, negotiators estimated that up to $6 trillion has to be invested each year in renewables and decarbonization until 2030 to reach net zero emissions by 2050.

Two major UK banks, Barclays and HSBC, pledged a total of US$2 trillion, with $1 trillion each, by 2030. While another two large US banks, JPMorgan Chase ($2.5 trillion) and Citigroup ($1 trillion), have committed a total of $3.5 trillion last year to sustainable initiatives by the same decade.

Banking on Climate & Sustainable Financing

Banks are not just providing capital to firms that innovate climate change solutions. Other activities include:

advising clients on the transition to net zero such as mergers and acquisitions,
asset disposal, and
financing of green projects.

A UK major bank Barclays revealed that it aims to allot $1 trillion of its funds by the end of 2030 for sustainable financing. It will be primarily to support firms that transition to a low-carbon economy. It will also be to ramp up its debt and equity capital markets to meet its climate goals.

Barclays said that it will focus on providing advisory services and deliver financing to firms to help expand their green technologies.

The $1 trillion climate pledge will involve green mortgages, sustainable financing structures, and financing for renewable energy firms.

Part of its climate commitment, the major bank is also ramping up its equity capital investments after seeing success in this space. To date, it has invested £84 million in scaling up startups that innovate renewable energy storage solutions.

Its new investment will center on prominent decarbonization technologies such as hydrogen and carbon capture. These technologies are critical to helping carbon-intensive sectors transition to lower carbon use. Common areas include energy and power, real estate, and transportation.

This new climate commitment marks a big increase from the bank’s goal to provide sustainable investments from £175m by 2025 to £500m by 2027. The $1 trillion pledge starts from 2023.

Barclays is not the only financier that’s ramping up its funding to help the world decarbonize.

Other major banks are also updating and increasing their climate commitment to stir up the transition. But some of them are struggling to weather big criticisms that most are still financing new fossil fuel projects. HSBC is one example.

HSBC Climate Policy Update

Europe’s largest bank HSBC updated its climate policy saying it will no longer offer new lending or capital market financing for new oil and gas fields or related projects.

The banking giant has also said it plans to provide up to $1 trillion in sustainable financing and investments by 2030. A responsible investment lobby group welcomed HSBC’s move, remarking:

“HSBC’s announcement sends a strong signal to fossil fuel giants and governments that banks’ appetite for financing new oil and gas fields is diminishing. It sets a new minimum level of ambition for all banks committed to net zero. We urge major banks like Barclays and BNP Paribas to follow suit.”

However, HSBC will still provide financing and advisory services to existing fossil fuel projects. But that should be “in line with current and future declining global oil and gas demand”.

And while it will do the same to energy sector clients, it will assess the firms’ plans in relation to clean energy transition.

Last October, Britain’s largest domestic bank Lloyds Bank also announced the same intention. It will no longer provide direct financing to fossil fuel projects as part of its new climate policy.

More Climate Commitment from US Major Banks

U.S. major banks are also catching up to the trend. JPMorgan Chase & Co. and Citigroup, in particular, are two examples. The chart shows their sustainable finance budget from 2016 to 2020, along with other large financiers.

Source: Rainforest Action Network (RAN), 2021

JPMorgan Chase announced last year that it will spend $2.5 trillion over 10 years, until 2030. The bank will use its finances for “long-term solutions that address climate change and contribute to sustainable development.”

Likewise, Citi also committed $1 trillion for sustainable finance by 2030. That is an extension of its environmental finance targets from $250 billion by 2025 to $500 billion by 2030. The fund will be for renewable energy and clean technology, green buildings, and sustainable agriculture and land use.

While they have different amounts in climate commitment, all major banks share the same goal – speed up the transition to a sustainable, low carbon economy.

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SOCIALCARBON Launches Methodology for Nature Conservation Projects

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The Brazilian standard SOCIALCARBON has finally rolled out a new methodology rewarding conservation efforts of areas of biodiversity importance with carbon credits.

The Standard, managed by the Social Carbon Foundation, focuses on nature-based solutions (NBS) with sustainable impacts that go beyond just carbon but with embedded co-benefits.

The SOCIALCARBON Standard

SOCIALCARBON is an international greenhouse gas (GHG) standard that embeds significant social, environmental and economic benefits (co-benefits) into nature-based projects by default, instead of using another co-benefits standard as what other standards do.

SOCIALCARBON was born out of the Bananal Island Carbon Sequestration Project. It’s a pilot sustainable development forestry project in Brazil in the late 90s.

Brazil’s Ecologica Institute first developed the standard whose management was later passed down to the Social Carbon Foundation.

What further makes it different from other standards is the flexibility of its criteria and procedures, building in a project by project element. Flexibility is the standard’s basic guideline, which includes the political and social contexts in its approach.

SOCIALCARBON believes that emissions reductions must result from efforts that benefit and improve living conditions for stakeholders involved in climate change projects. And that should be in ways that don’t degrade their resources base.

In other words, projects must embed conservation efforts along with Indigenous peoples and local communities.

All of SOCIALCARBON’s approved NBS methodologies were based on that principle, including its new methodology – SCM0006.

Methodology for the Conservation of Areas of Biodiversity Importance

SCM0006 will issue carbon credits to projects that protect and conserve areas of biodiversity importance. It is focusing on afforestation and reforestation projects under CDM’s Scope 14.

The recently concluded UN Biodiversity Conference (COP15) in Montreal also sought to reverse nature loss and restore biodiversity. And some experts suggested payments for this effort with “biodiversity credits”.

While its pending post-public consultation updates, developers can now carry out projects under SCM0006.

It is using established and reliable sources such as the “VCM methodology VM0015” of Verra and the CDM Tool for the “Estimation of carbon stocks and change in carbon stocks of trees and shrubs in A/R CDM project activities”.

SOCIALCARBON methodology document stated that SCM0006 will:

“…offer a new financing mechanism for conservation efforts worldwide. The methodology quantified net GHG emission removals (NERs) from project activities that conserve terrestrial habitats of significant biodiversity and/or ecosystem value that are threatened by degradation and deforestation.”

Most of NBS carbon projects focus on restoring degraded habitats such as reforestation. But areas that need conservation but with low potential for degradation are not included in carbon markets.

In effect, most nature conservation initiatives get financial support through grants only.

SCM0006 addresses that concern by creating a financing mechanism via carbon credits. It quantifies real carbon removals while embedding biodiversity monitoring and local community cooperation.

This new methodology quantifies net removals of CO2 only.

The standard is initially approved by CORSIA for vintage credits prior to 2021 only. That’s because it needs to clarify some more things to the offsetting scheme before SMC0006 receives full eligibility status.

SMC0006 Project Qualification & Eligibility Criteria

For a project to qualify for carbon credits generation under SMC0006, it must meet a number of applicability conditions.

First and foremost, the project must be on registered Indigenous land or it’s located within 1km, in partial or full, of a terrestrial area of biodiversity importance.

Also, the project must embed local communities’ knowledge and cultures into its activities that solely focus on restoration and/or restoration of the area.

Projects that convert the area to non-native habitats or land use will not be legible under the methodology. Example is converting forest to agricultural use.

More importantly, if the area is not conserved, it must be considered vulnerable to deforestation and/or degradation. The project should also outline strategies for removing or managing invasive species in the area.

SOCIALCARBON further requires projects to show that at least 60% of existing or historical conservation works in the are not funded or they depend only on grants/donations.

Lastly, the conservation project must ensure that poaching of keystone species, those that are critical to the overall function of an ecosystem, doesn’t go above 5% of the baseline population.

Otherwise, the project can’t get any carbon credits from SOCIALCARBON for that given year.

Same with Verra’s VM0015 methodology, SMC0006 offers a set of tools for establishing the baseline data and monitoring emission reductions.

The following are the carbon pools and emission sources included or excluded from the project boundary. Fossil fuel consumption, livestock management and biomass burning are not included as GHG sources.

SOCIALCARBON has also a pending methodology for carbon removals in private conservation areas. It’s under VVB review.

Meanwhile, it has several methodologies under development, including the one for Reduced Emission from Deforestation and Forest Degradation (REDD+). It will support high-quality project-level REDD+.

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Tesla Drivers Can Earn Carbon Credits by “C+Charge-ing” EVs

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The future of electric vehicle (EV) charging has finally come, yet the carbon credits market for EVs is still highly centralized and C+Charge aims to change that.

Big industry players such as Tesla has earned hefty income from selling carbon credits, making a total of ~5.4 billion to date. But the small ones like their consumers enjoy little to none of the rewards of their carbon reduction actions.

Democratizing Access to Carbon Credits Market

In 2022, the carbon credit industry is at around $851 billion in size. And with an average growth rate of 31% per year projected over the next few years, the market will reach $2.4 trillion in 2027.

Yet, participation in the carbon credits market remains limited to large corporations that are paying to pollute. Many firms that remove carbon from the air or invest in carbon offset activities also have a role in this near trillion-dollar industry.

But many people, especially small consumers, are still unfamiliar with the carbon credit market. One reason is because they don’t have the capital to access the market even if they also do carbon avoidance actions. One of them is driving an EV.

In the US, the average passenger vehicle releases 650g CO2/km. The government has plans to phase out fuel cars with EVs while Canada and European nations are also planning the same.

Unfortunately, there’s currently no set standard for EV charging customers and there’s also no uniform payment gateways available across different charging stations. Charging station owners and EV manufacturers do earn carbon credits but EV drivers don’t.

This is why C+Charge created a blockchain-backed solution to address such issues through its real-world dynamic utility token. The goal is to democratize access to the carbon credit market.

Democratization of the carbon credit industry plays a key part in its future growth. And cryptocurrency or blockchain technology will play a key role in promoting accessibility.

C+Charge seeks to bring more awareness and accessibility to the carbon credits markets. One way to do that is rewarding EV drivers with carbon credits as they charge their cars. The payment system is opening up to a greater number of EV consumers to drive demand.

C+Charge and GNT Carbon Credits

C+Charge is developing a peer-to-peer blockchain-based payment system designed to bring carbon credits to EV drivers like Tesla.

It intends to create a complete EV charging ecosystem that democratizes the carbon credit industry. At the same time, providing a revolutionary customer experience with a streamlined and transparent pricing and payment system.

And the platform also hopes its solution can attract a wave of new EV buyers with the prospect of being financially rewarded for reducing their carbon footprint by driving an EV. Here are the platform’s key features:

How C+Charge Works

C+Charge’s strategic partnership with Flowcarbon will provide tokenized carbon credits through Flowcarbon’s Goodness Nature Token ($GNT).

Drivers will use the C+Charge application to pay to charge their EVs using the native cryptocurrency CCHG. Then they will be rewarded with carbon credits in the form of $GNT. Tokenholders will also earn carbon credits from a percentage of transaction fees on a pro-rata basis.

GNT token represents a verified voluntary carbon credit backed by venture capital firms a16z Crypto, Samsung Next, and fund manager Invesco.

In essence, the more EV drivers charge and the more CCHG they spend, the more GNT they will earn. Plus, there’s a 1% tax on all transactions that C+Charge uses in buying carbon credits and then distributing them proportionately among token holders.

A unique feature of the C+Charge token ecosystem is that each time tokens are used to pay for a charge, they will be removed from circulation. This further gives a constant supply of demand in the network.

C+Charge Tokenomics

And as the charging stations grow, the number of tokens taken out of the system also increases, providing organic support.

Apart from being a payment platform for EV charging and a carbon credit tracker, C+Charge will also help users locate nearby charging stations and offer useful information. It will show real-time charger wait times and charging station technical diagnosis.

How to Invest in C+Charge Presale

To fund its development, C+Charge recently opened the pre-sale of its CCHG token. 40% of the token’s maximum supply of 1 billion will be available to the public over the next few weeks.

Currently, CCHG tokens are on offer for $0.013 each, but will increase to $0.02350 over the course of four presale stages.

With the high levels of interest in green projects, as seen by the recent success of the IMPT.io presale, investors must decide soon if they want to purchase tokens at a discounted rate. Doing so is easy.

Users just need either a Trust Wallet or MetaMask Binance Smart Chain crypto wallet. They need to fund the wallet, which also includes an option for a card. Then they have to connect their wallet on the C+Charge website.

Users will now have the option to buy CCHG tokens using either BNB or USDT on the Binance Smart Chain. They can then claim the tokens that will enter their wallet after the presale is over.

Spreading the rewards of sustainable mobility with carbon credits, improving the environment, and reducing emissions on a global scale are what led to the C+Charge revolution.

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Top 5 Carbon Crypto Companies to Watch in 2023

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Right now, climate change has become one of the most critical issues the world is facing. It affects everybody living on this planet and could have serious lasting consequences for all of humanity if not addressed.

That’s why carbon credits have been on the radar in all sectors – not just the obvious ones like energy, agriculture, and forestry.

And one of those industries is blockchain technology.

The strengths of blockchain technology, such as its transparency, secure record-keeping, and decentralization are advantages for carbon credits.

That’s why many carbon crypto companies are already in the works. There’s a massive opportunity here for two of the biggest current investment trends to develop their synergies.

With that said, let’s take a look at what some of the most promising carbon crypto companies for 2023 are.

1. KlimaDAO

Topping our list is one of the first big movers in the crypto carbon space: KlimaDAO, also known by their coin KLIMA. Its goal is to accelerate the speed at which the price of emitting carbon is going up. And that’s by buying and retiring carbon offsets.

How are they doing this?

First, carbon offset credits are purchased from Verra’s Verified Carbon Standard registry, which ensures their quality. These credits are retired, and then minted as tokens via the Toucan Protocol (more on this later). These tokens are known as Base Carbon Tonnes (BCTs).

Each BCT represents one tonne of carbon removed from the atmosphere.

Each KLIMA coin is backed by at least one Base Carbon Tonnes. Owners of KLIMA coins are incentivized to grow their share of the coin through bonding more BCT or staking their holdings for yield.

There’s a lot to unpack when it comes to KlimaDAO, but the impact it’s had so far is undeniable. Last year, KlimaDAO bought up 2% of the entire voluntary carbon market. And as of the time of writing, KlimaDAO has retired 17.3 million tonnes of carbon offsets:

That’s as much as a small country like Croatia emits each year.

While KlimaDAO provides a price floor for the voluntary carbon markets, its success will not be decided by how well the voluntary carbon markets do. As with all crypto projects, the most important factor is whether or not people actually want to adopt it.

KlimaDAO is still in a growth phase, so to speak, as it seeks to expand its treasury and provide a more robust supply. The coin’s developers don’t expect a stable price to be reached until mid-century.

Still, KLIMA has been deployed for over a year now and has already made a big splash on the carbon markets. Many other carbon crypto projects are still stuck in the development phase. KlimaDAO may have an ambitious goal, but they’ve shown that their business model has legs to stand on.

2. Toucan Protocol

As mentioned in our discussion about KlimaDAO earlier, the Toucan Protocol isn’t a coin in and of itself. What it is, instead, is the infrastructure that helps crypto carbon projects like KlimaDAO exist.

Simply put, Toucan is a bridging protocol that turns real-life carbon credits into tokens that can actually be used on a blockchain. These tokens, referred to as Tokenized CO2 or TCO2, represent retired but yet unclaimed carbon offsets.

They’re retired from their source registry to prevent double counting, but haven’t actually been claimed against any emissions yet. And so still represent a specific amount of verified carbon offsets.

TCO2s are semi-fungible – they’re not all identical, as information about each credit’s origin is directly encoded on-chain. Still, similar credits can be fractionalized and grouped into carbon pools, where they can be traded.

The largest and most well-known carbon pool utilizing the Toucan Protocol would be the Base Carbon Tonne (BCT) used by KlimaDAO.

The bulk of carbon credits bridged by Toucan has gone to the BCT pool comprised of Ethereum Request for Comment 20 (ERC-20) tokens.

These ERC-20 tokens can be directly integrated into other DeFi applications.

Toucan was the first platform to allow for the tokenization of carbon credits, and they have several partners besides just KlimaDAO. They have a first-mover advantage in this space and have created their own in-house token, the Nature Carbon Tonne (NCT) for carbon credit buyers.

With a number of other top carbon crypto companies choosing to build on Toucan’s infrastructure instead of developing their own, there’s much potential for future growth here.

3. Moss

Similar to Toucan, Moss is all about the tokenization of carbon related real life assets.

A Brazilian company, Moss has their own token, the MCO2 token, which is created by tokenizing verified carbon credits from sources like Verra. Each MCO2 token represents one tonne of carbon offset, with a particular focus on credits generated from forest preservation projects in the Amazon rainforest.

With its token, Moss is focused on providing a platform for companies and individuals interested in offsetting their carbon emissions to purchase high-quality, fully transparent carbon credits.

Moss also has a secondary Amazon Forest NFT project.

Moss first bought up several parcels of land in the Amazon rainforest, split them into 1-hectare lots, and then sold them as NFTs.

The funds from each NFT sale have gone towards a 30-year preservation fund that will cover the costs of activities like patrolling and satellite imagery to protect the area.

The end goal of this project would be to create a “green wall” around part of the Amazon rainforest to block deforestation efforts. Moss has sold out three sets of these NFTs, and more releases are on the way.

With several Brazilian carbon credit contracts locked in for MCO2 token supply in addition to their sold-out NFT series, Moss is another one of the few carbon related cryptos firms that’s actually deployed a successful solution to the markets.

4. Nori

A carbon removal marketplace that focuses on coordinating transactions between small farm-based suppliers and carbon credit buyers, Nori hasn’t actually launched their token yet. Instead, Nori understandably chose to begin by ensuring that their business model was sound and started with a pilot program.

By partnering with U.S. farmers practicing regenerative agriculture, Nori has secured a number of domestic suppliers of high-quality carbon credits. Some of these suppliers are shown below:

The top layer of soil is actually one of mother nature’s largest natural carbon sinks, containing three times as much carbon as the entire atmosphere.

However, human farming has been causing carbon to be released from the soil much faster than the rate at which it’s being replaced.

This soil carbon loss is what Nori targets, with their focus on regenerative farming projects. The end goal of each project is a form of carbon sequestration known as soil carbon storage, which produces carbon credits.

These carbon credits make up Nori’s primary asset, the Nori Carbon Removal Tonne (NRT).

Each NRT represents one tonne of removed CO2, stored for a minimum of ten years and is independently verified and audited to ensure each NRT truly represents one tonne of carbon sequestered properly.

Moving forward, Nori plans not only to expand their supply partnerships to international farms, but also intends to tokenize their NRTs into NORI tokens.

These NORI tokens will be deployed on the sustainable Polygon network. This creates an accessible secondary market for Nori’s NRTs with all the associated benefits of being on a blockchain.

Polygon is a leading Layer 2 Ethereum solution and is currently the 10th largest cryptocurrency by market capitalization.

Polygon partnered with KlimaDAO early last year to go carbon negative by purchasing – these names might be familiar – BCT and MCO2 tokens.

With their business model proven by their pilot program, Nori has partnered with Bayer AG. It’s one of the largest pharmaceutical and agricultural companies in the world, to scale up their NRT supply.

The initial tranche of their agreement, valued at $14.4 million, covers 400,000 acres of farmland.

Nori plans to deploy their token later this year. This launch, coupled with their Bayer partnership, should make 2023 a very exciting year for Nori.

5. DevvStream

Rounding out our list of crypto carbon companies to watch is one that’s a bit less strongly focused on crypto.

DevvStream, at first glance, is a carbon streaming company that provides capital for carbon credit projects in exchange for a share of production down the road.

Where the crypto comes in, however, is thanks to DevvStream’s relationship with its parent company, Devvio.

Devvio has a proprietary blockchain-based ESG platform that DevvStream uses to put the carbon credits it gets from its streaming agreements on-chain.

Once on the platform, DevvStream’s carbon credits gain many of the benefits that other carbon token projects enjoy.

In addition to this, DevvStream gets priority access to Devvio’s commercial clientele who are already using the latter’s ESG platform. If any of these customers happen to be looking for carbon credits, DevvStream’s will be the first they check.

On top of this, DevvStream has also partnered with the largest voluntary carbon exchange in the world, Xpansiv. The goal is to provide additional liquidity for its carbon credits.

With its access to Devvio’s blockchain ESG platform and clients, as well as Xpansiv’s carbon credit exchange, DevvStream is uniquely positioned among the top carbon crypto companies to make the most of the carbon credits it’s putting on the blockchain.

The post Top 5 Carbon Crypto Companies to Watch in 2023 appeared first on Carbon Credits.

Internal Carbon Pricing Guide for Companies 2023

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Companies with internal carbon pricing say this tool allows them to assess the financial implications of their carbon emissions and incentivizes them to shift to low-carbon initiatives. It also complements the emissions reduction regulations by governments under which businesses are subject to.

Others even lauded that an internal carbon price or tax helps them in achieving their climate goals while addressing shareholders’ concern about disclosure. While some businesses use it to help them prepare for future policies on carbon emissions.

So, what is internal carbon pricing (ICP)? How does an internal carbon price work for a company? Do businesses really pay for their emissions via a carbon tax? This comprehensive guide will answer all these questions and more about internal carbon pricing.

What is Internal Carbon Pricing?

The heavy emitting sectors have been using a business carbon pricing as part of their risk mitigation strategy since the 1990s. In particular, firms in the oil and gas, minerals and mining, and the power sectors are using this pricing tool to place a value on their carbon emissions in a manner that drives positive change in their business.

When an internal carbon price is set, a cost is assigned to every ton of carbon emitted. Companies can then factor that cost into their business or investment decisions, encouraging efficiency and low-carbon innovation.

According to 2016 disclosures to CDP (Carbon Disclosure Project), over 1,200 companies worldwide are either looking to set an internal business carbon pricing or preparing to do so. Most of them are in Europe and North America but businesses in emerging economies such as China, India, and Brazil have seen the highest increase in ICP use.

And as companies are getting more serious about taking climate actions, internal carbon pricing also becomes more vital in helping the world transition to a low-carbon economy in 2023 and beyond.

If your company is also considering having an internal carbon price in place, then you need to know that it comes in three major types.

3 Types of ICP

There’s no definitive answer on what your company’s carbon price should be. Plus, there are also many different ways that the cost of carbon can be integrated into your business operations.

That only means that the best starting point for your business when pursuing internal carbon pricing is to understand your own drivers for it. To help you with this, here are the forms of internal carbon price you can consider.

Internal Carbon Tax

An internal carbon tax is a monetary value on each ton of carbon emitted by your business activities. This is readily understandable throughout your company. You just have to keep a record of and report those activities.

The collected fee becomes a revenue that your company can use to fund its emissions reduction efforts. While there’s no exact amount of tax to follow, the internal carbon fee you can charge ranges from $5-$20 per metric ton.

Setting the fee requires consideration of all internal factors across the business impacting the tax levied. The practicalities involved as to how the money can be collected should also be considered.

An alternative to imposing an internal carbon tax is designing an emissions trading system such as the EU ETS. It works like the cap-and-trade schemes used by the governments today.

It’s basically placing a limit or cap on how much carbon can a business unit or activity emit. Any excess will be charged accordingly by how much is the value of each ton. Typically, the price is set much lower than a shadow cost price.

Shadow Carbon Price

This internal carbon pricing sets a theoretical or assumed cost per ton of carbon. Not being a real price, this may be easier to implement as there’s no need to make changes in your business unit budgets or financial allocations.

Under this pricing method, a cost of carbon is determined within business processes which include:

business case assessments,
procurement procedures, or
business strategy development.

The goal is to show the cost of the carbon implications of those business decisions, which can then be communicated to stakeholders.

Usually, a shadow price is set higher than an internal carbon tax to reflect the expected future price of carbon. It varies a lot, from $2 to ~$800 per ton.

Shadow cost pricing helps your business understand carbon risk and prepare appropriately. And that’s before the hefty shadow price becomes a real carbon price.

Implicit Carbon Price

An implicit price is based on how much a company spends to cut carbon emissions on projects like renewable energy. It also takes into account costs of complying with certain government regulations.

Any firm with climate related goals has an implicit price on carbon emissions. The prices can even appear several times within the same company. You can use them to specifically identify which costs to minimize and better know your emissions.

You can even use this price as a basis for determining and launching an internal carbon price for your business.

Though each type of internal carbon pricing varies, many companies use a hybrid of approaches combining their different attributes.

But how exactly does an internal carbon price work for your company? Why is establishing it important for your business? Let’s break it down in the next section.

How Does an Internal Carbon Price Work For a Company?

Right now, there are no international standards that businesses should meet when setting up their internal price on carbon. So how it works for your company is really up to you.

And despite lack of standards and regulations, opting to implement an internal price is beneficial for many reasons.

After all, there are some helpful guides and initiatives you can still look to such as the Caring for Climate initiative from the UN Global Compact. It encourages firms to become a Carbon Pricing Champion by setting an internal carbon price, communicating progress, and advocating for its importance.

Also, Canada recently launched its Global Carbon Pricing Challenge at COP27 climate summit in Egypt. It makes existing pricing systems more effective and support other nations when adopting carbon pricing.

Internal carbon pricing helps companies in managing their climate-related business risks. ICP can also serve as an important risk-mitigation tool with multiple benefits beyond your company’s operations, customers, and communities.

The signals are out there that carbon risks are real and they’re coming fast.

Last year, the Bank of England warned businesses to be ready to pay for carbon prices that can soar up to $100/ton. Likewise, the UK government also requires companies to report on their carbon-related risks by 2050.

Moreover, governments have been busy closing deals in line with their Paris climate goals. And the recent COP27 summit closed a lot of those deals, prompting countries to introduce carbon pricing mechanisms as part of their decarbonization strategy.

What that means is that the timeline for a change is now clearer than ever.

The best part? Your company will not only be prepared for that change but will also enjoy the benefits of having an internal carbon pricing system.

The Benefits of ICP

The drivers of ICP are specific to each company but in general, it brings the following major advantages.

Prepares for future regulation

Firms that track their GHG emissions and implement an internal price on carbon are better prepared for a regulatory future in which carbon is priced. In a sense, the mechanism helps your company in de-risking against future carbon price and future-proofing its business strategy.

Addresses sourcing requirements

Companies that source or operate internationally are exposed to certain carbon pricing standards. This makes them a subject to the existing global patchwork of carbon emissions regulations. So, if you intend to operate globally, it’s a good idea to start calculating, monitoring, and pricing carbon emissions to make it easier to work your way around international pricing policies.

Promotes carbon innovation and efficiency

Pricing carbon bolsters innovation and efficiency improvements, provides a new lens for capital investment decisions, and inspires carbon efficient technologies. It also makes emissions intensive business practices more costly, urging firms to avoid them.

Plus investors are starting to prioritize ventures that promote corporate sustainability, including internal carbon pricing, and are increasingly investing in them. So, it generates finance for sustainability initiatives.

Broadly speaking, ICP also helps make carbon considerations more central to business operations while enabling companies to respond to investors’ concerns on climate.

Given these benefits, do businesses pay a carbon tax? Or better yet, do they really have to pay for their carbon emissions with a tax?

Do Businesses Pay a Carbon Tax?

A carbon tax is considered as an essential policy tool to control carbon emissions: high prices for carbon-emitting products and services reduce demand for them.

A carbon tax is generally levied on fossil fuels that businesses have to pay. While most companies are emitting carbon and other GHGs, not all of them are paying carbon taxes.

According to the World Bank, there are 68 direct carbon pricing instruments operating as of June 2022 in 46 national jurisdictions around the world. These comprise 36 carbon tax regimes and 32 emissions trading systems (ETS).

Source: World Bank

ETS are tradable-permit systems which set a cap on the amount of greenhouse gasses that can be emitted. Businesses and entities have the flexibility of buying and selling emissions units, popularly known as carbon credits.

Some countries have already adopted a carbon tax while discussions are ongoing in others. There are also proponents of setting up a global carbon tax. But governments often prefer to use measures other than a tax to contain emissions for some reasons.

For example, mandating carbon taxes can be politically difficult because some sectors of the business community may oppose such a tax for financial reasons. Carbon taxes are also often regarded as regressive as they can penalize poorer members of society by contributing to price rises.

Another complicating factor is the so-called “carbon-leakage”. This means businesses may try to move their operations to other countries with less strict emissions policies. This can still increase the countries’ total emissions.

And among countries that have a carbon tax, the levels vary a lot and other measures exist alongside it. ETS is one of them as aforementioned as well as internal carbon pricing.

So what companies have an internal carbon tax or price in place?

Companies With Internal Carbon Pricing Programs

Business carbon pricing becomes most meaningful if it’s embedded into a company’s business strategy.

Some firms use revenue from its internal carbon tax to fund projects that reduce emissions such as renewable energy and energy efficiency. Popular names include Microsoft, Shell, BP PLC or British Petroleum, and more.

Others are also embedding a shadow price in their strategies by shifting investments into low-carbon assets. More and more businesses follow in their footsteps and experiment with internal carbon pricing.

In Europe, ICP was a key factor in an energy firm’s decision to close several of its power plants. In the U.S. some financial services companies use internal carbon pricing to identify high-return, low-carbon investment opportunities.

But a question rises if their pricing thresholds are correct.

A leading management consulting firm McKinsey & Company looked at data from companies that have disclosed internal carbon pricing programs. Their analysis revealed that there’s growing interest and varied ways in how companies use these pricing mechanisms.

In particular, 23% of around 2,600 companies said that they’re using an internal carbon tax or fee while 22% of them plan to do so in the next 2 years.

The top firms that reported the most were from the energy, materials, and financial industries, and then followed by the technology and industrial sectors.

A geographic analysis shows that 28% of companies in Europe are using an internal carbon price. Japan (24%), the UK (20%), and the U.S. (15%) have the highest percentages of companies using the pricing mechanism.

The findings also show that price thresholds per ton of carbon used vary widely by industry and region.

For instance, in Asia it’s only $18/ton while it’s higher in Europe, $27/ton. With this, companies are choosing values that are most useful for their regions and business contexts.

The chart below reveals the high variability of internal carbon prices within and between regions and industries.

To address this huge difference in the internal cost of carbon, attempts are underway to help firms determine optimal pricing standards. Some industry groups suggested potential pricing levels ranging from a few dollars to above $100/ton.

Yet, the issue remains a topic for debates.

Nonprofits argue that the social cost of carbon is far above $50/ton of emissions. Others further said that such a number is far lower than it should be as it doesn’t include significant impacts of climate change.

In the U.S., researchers determined that the social cost of carbon in the country should be at $185/ton. That’s over 3x than the current social cost of carbon which is a $51/ton.

Meanwhile, an expert group estimates that companies need to set internal carbon pricing between $40/ton and $80/ton in 2020. But that should go up between $50/ton and $100/ton by 2030 to reduce emissions in line with the Paris Agreement.

In contrast, the majority of the companies that have internal carbon pricing in place have thresholds at about $40/ton only.

Accounting for carbon emissions and paying for it is just one way for companies to manage climate-related risks, strengthen corporate values, and improve their investment decision making. But it’s a good step to take.

To date, internal carbon pricing initiatives by companies impact 22% of global GHG emissions, up from 15% in 2017. But as the analysis suggests, their pricing thresholds are far lower than they should be to account for all the costs of emitting carbon.

So, if companies want their business decisions to completely reflect the real costs of carbon emissions, they should take a closer look at their existing internal carbon pricing programs and then re-assess them.

This means you should do more research and analysis of your own business operations before deciding how much to pay and then make the first move, which is calculating the price of carbon your company should set internally.

Calculating Internal Carbon Price

This can be done in many ways. One way is by referencing externally published sources to reflect the associated risks. Examples of these are the UK Green Book guidance or the CDP Carbon Pricing Corridors.

You can also link them to determining the cost of carbon offsets you plan to use. They are credits you can buy to neutralize emissions that your company can’t avoid or reduce. This can go when considering a shadow price.

When it comes to measuring an implicit carbon price, it is based on an understanding of how much your company spends on reducing GHG emissions. This is necessary to know where carbon is emitted the most in your business and cut them appropriately.

If you want to go for a more complex method of including the social cost of carbon in your internal pricing, then you have to factor in all the quantifiable costs of emitting a ton of CO2. This method will take in a much wider range of social impacts into your calculation.

Overall, regardless of which form of internal carbon pricing your company chooses to take, pursuing it may worth your time and effort. After all, setting a price on carbon seems to be the inevitable future of doing business to keep the planet from heating up.

Should you want to learn more about carbon pricing in general and how it works, just take a few more minutes and read our guide here.

The post Internal Carbon Pricing Guide for Companies 2023 appeared first on Carbon Credits.

EU Makes New Deal to Reform its Carbon Market

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The European Union (EU) striked a new deal to reform its carbon market, the centerpiece of the bloc’s Green Deal that aims to cut emissions and reach net zero by 2050.

The EU Emissions Trading System (ETS), created in 2005, is the world’s biggest carbon market. It covers around 40% of total EU emissions.

It permits industries with high energy demands like steel and cement to use the “polluter pays” approach to cover their emissions by buying ‘free allowances’ (or carbon credits).

The credits work like quotas meant to reduce emissions over time to propel those industries to emit less and invest in green technologies. The goal is for the EU to achieve its net zero targets.

Negotiators of the political deal went through heated talks for about 30 hours before agreeing to the EU carbon market reform. One negotiator remarked:

“The deal is a success for the EU and will provide certainty to companies and investors even if some compromises had to be made as the economic environment is very challenging.”

EU Carbon Market Reform: The New Changes

Last June, the European Parliament (EP) had rejected the bill to reform the ETS.

The new agreement seeks to achieve three key changes to the EU carbon market, according to the EP’s statement:

aims to accelerate emissions cuts,
phase out free allowances to industries, and
targets fuel emissions from the building and road transport sectors.

Under the previous system, the EU requires around 10,000 entities to buy carbon credits when they pollute. This is critical to meeting the bloc’s target to reduce net emissions 55% by 2030 compared with 1990 levels.

Under the new deal, that target now becomes 62% reduction from 2005 levels by this decade. Industries covered by the EU ETS must reduce their emissions by that amount.

EUA Out, CBAM In

The new plan also aims to speed up the timetable of phasing out the free allowances. 48.5% by 2030 and a complete removal by 2034.

In particular, it will remove 90 million carbon credits from the EU ETS in 2024 and 27 million in 2026. Then the rate at which the cap on EU allowances (EUA) falls is cut by 4.3% from 2024-2027 and 4.4% from 2028-2030.

The price of EUA has been soaring in recent years as seen in the chart below.

That could be due to the expectation that stricter EU emissions targets will lower the supply of carbon credits under the scheme. It reached a record high this year – 99.22 euros/tonne.

President of the EP’s environment committee, Pascal Canfin, said the carbon price for industries affected by the ETS would be around 100 euros/tonne. He posted on his social media that there’s no other continent that has “such an ambitious carbon price”.

The reduction in free EUA will be compensated by another landmark measure agreed by the bloc – the CBAM or Carbon Border Adjustment Mechanism. It’s a “carbon border tax” that will impose a pollution price on imports of certain goods to the region.

CBAM will help protect domestic producers from cheaper rivals in countries with less strict environmental standards. One of the negotiators noted that CBAM can be “a catalyst for global carbon pricing”. But it requires diplomatic skills to work.

New Market Inclusions

Lastly, the EU carbon market reform aims to include the maritime sector as well as intra-European flights. Plus, there’s a possibility to also cover waste incineration sites from 2028. But that depends on the report from the EC.

What’s for sure is to make households pay for emissions on their gas heating and road fuels from 2027. The price will be capped until 2030. Suppliers of fuel and gas need to buy carbon credits to cover their emissions.

But this change raises concerns households are already struggling with high energy prices. The MEPs argued that it should apply to offices and large vehicles only.

If energy prices remain high, this part of the plan will be postponed for a year, from 2027 to 2028. Revenues from this second EU carbon market will go to what the bloc called “Social Climate Fund”. It will be a 86.7 billion euro fund that will help households and businesses cope with the carbon costs and soaring energy prices.

As for Peter Liese, the head negotiator, this new deal will:

“…give breathing space for citizens and industry in difficult times and provide a clear signal to European industry that it pays off to invest in green technologies [until 2026].”

A conservative MEP added that after such period, it will be “the moment of truth: we must reduce our emissions by then, or pay dear”.

The deal is still provisional and needs formal adoption by the European Parliament and the European Council.

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Carbon Removal Startup Mombak Launches $100M Reforestation Project

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Mombak rolled out a $100 million reforestation project in the Amazon rainforest for carbon removal. While the main goal is to remove carbon from the atmosphere, it also has other important benefits.

Restoring native species will improve biodiversity and soil quality. The project also aims to generate economic opportunities for the local community.

Mombak’s Reforestation Project

The reforestation project will plant 60 native Brazilian tree species on degraded pastureland. The project protects the trees forever, ensuring they are not cut down for timber. Reforestation projects need to ensure that trees store atmospheric carbon dioxide forever.

Mombak employs a diverse mix of experts in various fields. This includes scientific research, forestry, technology, and finance.

Mombak’s founders are Peter Fernandez and Gabriel Silva. Peter was the former CEO of Brazil’s first technology unicorn (99). Gabriel Silva was the CFO of Brazil’s Nubank.

The reforestation project of Mombak has several high-profile investors. These include Bain Capital Partnership Strategies, Byers Capital, and Union Square Ventures.

Every aspect of the project, such as selecting land and plant species will use innovative technology to optimize results. The project will use drones to measure carbon baselines. It also uses satellite imagery and bioacoustic sensors to check biodiversity.

For the project, Mombak has partnered with non-profit organization Conservation International. They specialize in areas like carbon accounting, community engagement, and conservation design.

Permanent Carbon Sequestration

The world’s mission to achieve 2050 net zero emissions will need sustainable carbon removal strategies. Current carbon emissions rates are too high.

Hence, it is no longer enough to reduce carbon emissions. It is necessary to remove existing carbon dioxide from the atmosphere as well.

One of the most effective carbon removal solutions is large-scale reforestation.

Compared to other carbon removal methods, it is easier and cheaper to put in place. They also generate high-quality carbon credits. This is because most reforestation projects offer permanent carbon sequestration.

The market for carbon credits has been quite favorable recently. This has increased the number of reforestation projects worldwide.

We can look to past reforestation projects to judge the potential of new ones. There are similar reforestation projects that have been around for decades.

One such example is the 20-year old Peugeot-ONF Forest Carbon Sink project. It is in the northwestern Mato Grosso state.

The project reforested 2000 hectares of degraded pasture land on the São Nicolau Farm. It has, to date, sequestered 394,000 metric tons of CO2 (equal to taking off 85,000 cars from the road every year).

The reduction in CO2 from the Verra-certified project generates carbon credits. They use Pachama, an online marketplace to trade carbon credits.

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