The world needs to reduce greenhouse gas emissions. To do that, companies need to balance their emissions by buying credits from projects that reduce, sequester, or avoid them. A carbon credit exchange is a place where buyers and sellers can find one another. The exchange uses advanced technology to match them based on multiple parameters, and the platform is designed to scale as the market grows.

The carbon.credit exchange market is driven by companies that want to offset their emissions and meet corporate net-zero goals, as well as entities that are pre-compliance and wish to purchase credits at a lower price before new regulations come into effect. These buyers may be motivated by a range of factors, including environmental ethics, social responsibility and a desire to enhance their reputation. However, the market suffers from inefficiencies and limited liquidity due to inconsistent standards and verification methods.

A tradable carbon credit represents ownership of one tonne of CO2 or other greenhouse gas reduced, sequestered or avoided. These are created through a variety of activities, such as agricultural and forestry practices, or by projects that capture and store emissions, such as power plants. Some credits are issued under the Clean Development Mechanism (CDM) program of the Kyoto Protocol, while others are emitted as part of a country’s emissions reduction targets. The most common credits are Certified Emission Reductions, or CERs.

In the compliance market, governments set an emissions cap and then allow firms to buy or sell emissions allowances on a carbon credit exchange to offset any excess. It is estimated that the market for CERs will grow to USD 50 billion by 2022.

To create a more transparent and efficient carbon credit marketplace, there is a need for a set of common quality standards and attributes that can be applied to all projects. These should be compiled by an independent third-party organisation and used as a foundation for a common taxonomy, allowing additional attributes to be standardized. This would enable a more effective matching of buyers and suppliers through a standardised description of each credit, and lead to a higher level of market integrity.