when did carbon credit exchanges start
carbon credit exchanges start
Carbon credit exchanges started with the Kyoto Protocol, which aimed to reduce greenhouse gas emissions. Since then, the market has exploded, increasing in size and becoming a popular source for individuals and companies looking to offset their carbon footprint. It is estimated that the global market for carbon credits is currently valued at $211.5 billion. By 2027, it is expected to grow at a compound annual growth rate of 31%.
As a result of the global commitment to climate action, the carbon credit exchange market is expected to continue growing. In fact, the industry has grown more than twice as fast in the last five years as it did before the signing of the Paris Agreement. With more countries and groups committed to the cause, more projects will be created and more emissions will be prevented.
The two main markets are the regulated and the voluntary carbon marketplace. The regulated market is governed by laws. In this case, the laws specify the amount of carbon emission reductions that each nation can release. Those that exceed the quotas are allowed to purchase extra allowances as credits. However, if they don’t meet the quotas, they are penalized. In turn, those that do have allowances can sell them to other polluters.
when did carbon credit exchanges start
The voluntary carbon market, on the other hand, does not have any government regulation. In this case, entities can buy or sell the carbon credits based on their carbon emissions. Among the top trading platforms are Verra and CTX.
Both of these exchanges allow buyers and sellers to conduct business in real time. This is beneficial for both institutional investors and businesses. Many businesses and landowners see carbon markets as a way to help protect their investment. They may want to invest in these markets to offset their own emissions, or they may be interested in reducing their carbon footprint in the long term.
ACX uses a digital warehouse to price and mark-to-market its carbon and energy transactions. The company also takes advantage of recent blockchain technology to create securitized carbon credits. ACX’s client volume is mainly from Singapore and Australia, although the firm has locations across the globe. It focuses on leveraging the speed and efficiency of the distributed ledger technology to enable carbon and energy transactions.
CTX’s platform is unique because it allows traders to trade credits from a variety of industry standards. Participants can list credits directly from their registry account, and it also offers a footprint calculator. The company is headquartered in the UK, but has other locations in Europe and Asia. It has traded hundreds of millions of tons of offsets in the past couple of years. The company offers credits in USD, EUR, AUD, and GBP.
The AirCarbon Exchange, on the other hand, was launched in Singapore in 2019. The AirCarbon Exchange is a member-based spot exchange for airlines and aviation companies. It raised $3.6 million in funding over three rounds. It has a client base of more than 130 organizations.