Carbon Issuance
Subtype
Last updated
Subtype
Last updated
No asset of this subtype is currently listed on the Regen Atlas.
A carbon issuance (a.k.a. carbon credit) are generally traded in state-managed markets commonly referred to as emission trading schemes (ETS). Put simply, ETS carbon credits represent “the right” to emit CO2, and have value due to the supply-side scarcity of their issuance and demand-side requirements set by a state regulating authority. Like the Voluntary Carbon Market, ETS encounter issues with “over-crediting, unclear life-cycle of issued credits, and promoting double-spending due to the lack of transparency and inter-regional communications”.
The first state managed carbon credit system, the Clean Development Mechanism, was created 30 years ago under the Kyoto Protocol, with little innovation since. Today, many fragmented markets exist, such as the European Emission Trading Scheme (EU ETS), New Zealand Emissions Trading (EZ ETS), the Midwestern Greenhouse Gas Accord (MGA), as well as California’s cap-and-trade program. Given state-imposed market fragmentation, ETS tend to produce illiquid environmental assets with high market transaction costs. Helping mitigate these issues, some ETS legally permit the use of carbon offsets for entities to meet their compliance obligations.
It is possible to find traces of projects aiming to offer on-chain carbon credit systems as early as 2016, yet to date no functional implementation exists of tokenized state-regulated ETS. New proposals involving the partnership of state organizations occasionally appear, such as a well-publicized agreement made between the Venom Foundation and the UAE announced this year. As detailed by :
“The Memorandum of Understanding (MoU) signed between the Ministry of Climate Change and Environment (MCCE), the Industrial Innovation Group, and Venom Foundation outlines four strategic objectives: reducing emissions, promoting sustainable agriculture, enhancing environmental health, and conserving biodiversity. [...] As the MoU between Venom and the UAE Government comes into effect, both entities … anticipate the … launch and implementation of the National Carbon Credit System."
