ThermiCo2

The carbon credits market, also known as the carbon offset market, is a financial mechanism aimed at reducing global carbon emissions. It operates on the principle that organizations and individuals can earn carbon credits by reducing their greenhouse gas emissions below a certain threshold. These credits can then be sold to entities that exceed their emissions limits, allowing them to offset their carbon footprint.

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Carbon credits can be categorised into two main families: conservation and removal. The conservation credit market is under closer scrutiny since January this year, after Follow the Money showed that for more than 60 percent of the carbon credits South Pole - the Swiss climate advisor and carbon credit trader - sold with its prestige project Kariba, the CO2 compensation suggested was far too generous.

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Transparency is also crucial in the carbon removal credit market to provide confidence to investors and stakeholders that the carbon removal activities are credible, measurable, and legitimate. Issuers of carbon removal credits typically take several steps to provide transparency to investors, like detail project documentation, independent verifications and registation in a recognized carbon credit registry, such as the Verified Carbon Standard (VCS) or the Gold Standard.

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To ensure growth in carbon removal projects, a granular data infrastructure is essential but currently missing. This infrastructure should support the collection, management, analysis, and dissemination of credit-level data related to carbon removal activities. Such level of transparency is essential for large scale projects, which typically have large capital requirements that be fulfilled only by capital markets participants.

Take the example of project financing: lenders and investors are focused on the project's cash flows and assets. Moreover, their regulation frameworks (e.g. BASEL III) require reporting on specific risks of the project. A data warehouse that aggregates credit, liability and project-level data would assure full transparency, verifiability, and benchmarking.

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Similar data warehouses have successfully provided value to markets, such as the ESMA Securitisation Repositories in the context of the Securitisation Regulation.