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.
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.
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.
Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: NETZ.
Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involves risks that could lead to a total loss of the invested capital.
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.
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”.
“…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.
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.
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.
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.
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 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.”
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.
Carbon credit transaction network “Carbonplace” formed by nine global banks including UBS Group AG and Canadian Imperial Bank of Commerce will launch early 2023 after going through pilot trades.
The new platform, Carbonplace, is a global carbon credit transaction network that will enable the simple, secure, and transparent transfer of certified carbon credits. It has settled pilot trades of environmental credits in Australia, Brazil, Singapore, and the UK.
Carbon credits can help channel large-scale investments needed to fund carbon reduction and removal projects.
As per BloombergNEF, demand for carbon credits can grow ~40x in the next three decades. This is due to companies’ use of credits as part of their 2050 net zero emissions strategy.
Unfortunately, the business of trading the credits has been criticized because of some firms using low-quality carbon credits to offset their emissions. Plus, the voluntary carbon market (VCM) relies on bilateral trading that’s often slow, opaque, and risky. These reduce trust in the market.
This is where Carbonplace comes in. The platform will only settle trades of credits that are verified by top carbon registries, such as Verra and American Carbon Registry.
Carbonplace and How it Works
Carbonplace’s unique blockchain-enabled technology will significantly change how carbon credits are bought and sold. It works similarly to Xpansiv CBL carbon market platform, the most dominant player today.
The trading process of Carbonplace includes procedures dealing with money-laundering and anti-fraud regulations.
Backed by large banks with a global client base, Carbonplace will have the ability to connect the markets, registries and exchanges of the VCM directly to millions of customers in various markets as shown in the map.
The carbon credit network’s member banks or founding partners include:
National Australia Bank
CIBC
UBS
Natwest Group Plc
Itaú Unibanco
Standard Chartered
BNP Paribas
Sumitomo Mitsui Banking Corporation (SMBC)
BBVA
They all share a common ambition to support urgent, large-scale climate action. They recognize the need for strong collaboration between the financial sector and other carbon market participants to bring trust, transparency, and accessibility to the VCM.
As to how Carbonplace works, the product’s chief officer Robin Green said:
“Think of it like eBay… We are just broadening the access to the market by providing transparency and trust. It’s not that you can’t buy credits right now, but we are really simplifying the process.”
The network will deliver those essential elements of a growing VCM with these three values:
It’s simple. The Carbonplace Rulebook will see to it that all members of the platform follow a single set of prudential rules, which removes the need for bilateral contracts between buyers and sellers. This makes it possible to retire credits within minutes and reduce the burden of individual transactions.
It’s secure. The network’s robust KYC will deliver another level of security. It enables customers to rely on the banks they already trust for settlement purposes.
It’s transparent. Carbonplace’s full ledger, audit, and reporting functionality will manage the carbon credit lifecycle from inception until retirement. This provides reliable records of ownership of carbon credits and reduces the risks of double counting.
Where Two Worlds Meet: Carbon Markets and Banking
Carbonplace is a place where the emerging world of carbon markets meets the established world of banking. How that looks is like this.
The instant, secure, and traceable settlement of carbon credit transactions via a secure, distribution network is critical in scaling the VCM.
The pilot trades on the Carbonplace network involved selling carbon credits from Carbon Growth Partners in Melbourne and Sustainable Carbon in Sao Paulo to banks.
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.
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.
The market for carbon sequestration has enjoyed an exponential growth in recent years, attracting vast interest from investors and governments. The main reason is that carbon sequestration technologies are not just beneficial to honoring our climate commitments, but crucial.
The Paris Agreement signed in 2016 set out an ambitious goal: to ensure that an increase in the average global temperature stays under 2C, ideally 1.5C. This means that we can only afford to emit 400 gigatons of carbon emissions to stay under this limit.
What countries around the world have discovered is that this goal is not achievable by implementing renewables alone. The pace of developing renewable technologies cannot keep up with the rate at which the world is emitting carbon dioxide.
Hence, carbon sequestration and removal needs to scale up significantly to remove existing emissions and halting continuing carbon emissions.
Scientists estimated that the world has to remove up to 10 GtCO2 annually from the atmosphere by 2050 to decarbonize. That removal capacity should double per year by 2100 as shown in the chart below.
Source: IPCC Report
The current carbon removal and sequestration market explores a broad range of technologies. This includes capturing carbon dioxide using large fans, changing the pH of the ocean to store more CO2 to recycling carbon emissions in cement production.
Here are the top 5 carbon sequestration companies to watch for in 2024:
Aker Carbon Capture
Location: Norway, Northern Europe
Founded: 2020
A subsidiary of Aker Solutions, Aker Carbon Capture is one of the largest and most established of the carbon sequestration companies.
It is one of the few publicly traded companies in the sector. It was listed in the Oslo Stock Exchange in 2020, and has a current market cap value of $750.65 million.
The company uses their proprietary carbon capture solution to capture CO2 from waste flue gases from a variety of industries such as oil refineries and cement plants. Its key offerings include modular solutions that are easy to transport and install. They also offer offshore and integrated solutions.
Though it was only established in 2020, it uses technology that has been developed by Aker for over 10 years. One of their current key projects is the Brevik cement plant which has a CO2 sequestration capacity of 400,000 tons per annum.
Update for 2026: Aker Carbon Capture has undergone a significant transformation. In 2024, it combined its carbon capture business with SLB (formerly Schlumberger) to form a joint venture now known as SLB Capturi. SLB owns 80% of the combined entity, while Aker Carbon Capture ASA holds the remaining 20%.
The company’s flagship project, the Brevik cement plant, officially started operations in June 2025. It is the world’s first industrial-scale carbon capture facility at a cement plant, with a capacity to capture 400,000 tons of CO2 annually.
Climeworks
Location: Switzerland
Founded: 2009
Climeworks is another established carbon sequestration company that uses direct air capture (DAC). The company recently raised $650 million in funding, the largest ever for a startup in the carbon removal sector.
It uses its modular CO2 collectors, where large industrial fans draw in CO2-containing air into the plant, and a CO2-selective filter separates the carbon dioxide.
So far, Climeworks has sold the collected CO2 to greenhouses and carbonated beverage companies. Recently, it has taken a step further and partnered with another carbon sequestration company called Carbfix to permanently store this CO2 instead of reselling it.
It launched its carbon capture and storage facility called Orca in 2021, in partnership with Carbfix. The facility has the capacity to capture around 4,000 tons of carbon per annum. To date, it is the only direct air capture plant that permanently sequesters the CO2 instead of recycling it.
Update for 2026: Climeworks continues to lead the Direct Air Capture (DAC) space. In May 2024, the company switched on Mammoth, its largest plant to date.
Located in Iceland, Mammoth has a nameplate capture capacity of up to 36,000 tons of CO2 per year—nearly ten times that of its predecessor, Orca.
In the US, Climeworks is advancing Project Cypress in Louisiana, a megaton-scale DAC hub supported by Department of Energy funding, with construction activities ramping up throughout 2025 and 2026.
Carbon Clean
Location: London, UK
Founded: 2009
To date, Carbon Clean has used its proprietary carbon capture process technology to sequester 588 metric tons of CO2. It has raised a total of $212 million in funding.
One of its key partnerships is the industrial-scale carbon capture and utilization plant in Chennai, India which has an annual capacity to capture 60,000 tons of CO2.
In 2021, the company launched its new solution, CycloneCC, which can achieve over 90% carbon capture rates. The company also prides itself on being cost-effective, as they claim they can capture CO2 for less than $30 per metric ton.
Update for 2026: Carbon Clean has successfully commercialized its “breakthrough” technology. In late 2024, the company launched the CycloneCC C1 series, a fully modular, columnless carbon capture unit designed to reduce the physical footprint of capture plants by over 50%.
The company is currently deploying units for industrial partners globally, including a major offshore pilot with MODEC on a floating production vessel (FPSO), scheduled for installation in 2026.
Carbfix
Location: Reykjavik, Iceland
Founded: 2006
Carbfix is a leading player in the carbon sequestration sector due to its novel carbon capture and storage technology. Carbfix’s technology aims to permanently store captured CO2 underground in rocks. Unlike other solutions in the sector, where the CO2 needs recycling, Carbfix offers a more permanent carbon sequestration solution.
Its key projects and partnerships with Climeworks are the aforementioned Orca plant and the EU-funded Arctic Fox pilot plant. To date, the company has raised $117 million in funding.
Update for 2026: Carbfix remains the industry leader in permanent mineralization storage. Their major focus for 2026 is the Coda Terminal in Iceland. This cross-border carbon transport and storage hub is scheduled to commence operations in mid-2026.
Once fully operational, Coda Terminal will receive CO2 captured from industrial sites across Northern Europe and inject it into the basaltic bedrock near Straumsvík for permanent storage.
Carbon Engineering (Oxy)
Location: Vancouver, Canada
Founded: 2009
Carbon Engineering is another big name in the sector that has raised a total funding worth $110 million. Its unique liquid DAC process that uses potassium hydroxide solution to capture CO2 has earned trusts and investments from Bill Gates, Chevron, Occidental, Airbus, Air Canada, and more.
Carbon Engineering licensed its DAC technology to 1PointFive, aiming to build a megaton scale plant in the Permian Basin, U.S., capable of capturing 1 million tons of CO2/year in 2024.
What makes it stand out from other carbon sequestration companies is that apart from its DAC plants, it also has air-to-fuels plants that can deliver global-scale quantities of clean fuels using captured CO2. These facilities will be operational in 2026.
Update for 2026: Carbon Engineering was acquired by Occidental (Oxy) in November 2023 for $1.1 billion and is now a wholly-owned subsidiary. Its technology is being deployed at massive scale by Oxy’s subsidiary, 1PointFive.
The most significant development is the Stratos plant in the Permian Basin, Texas. As of early 2026, Stratos is entering its commercial operations phase. Designed to capture 500,000 tonnes of CO2 per year, it currently stands as the largest Direct Air Capture facility in the world.
Carbon Sequestration Companies for Net Zero
Carbon capture or DAC plays an important role in meeting net zero emissions goals. In fact, the world needs the services of the carbon sequestration companies to bring the global energy system to net zero by 2050. Here’s the potential of these technologies in reaching net zero.
Estimations by the International Energy Agency showed that DAC can capture over 85 million tons of CO2 in 2030 and 980 million in 2050. But that needs a lot of work to do from those top carbon sequestration companies to help scale up the sector.
The good news is that the mega trend today indicates high regard for more investments in the space both from the public and private sectors. And through these carbon capture and removal technologies, businesses can meet and perhaps exceed their net zero targets.
Fondaction Asset Management (FAM), Priori-T Capital and partners launch one of the largest carbon funds with CAD$115 million to finance emissions reduction projects in North America – the Inlandsis II Fund.
The Fund will be managed by Fondaction’s new fund management platform, FAM, and its partners. The raised capital will be for projects that generate carbon credits both from compliance and voluntary carbon markets in North America.
Fondaction is the investment fund for those mobilizing capital for positive economic, social, and environmental outcomes. It manages net assets of over 3.11 billion dollars invested in the financial markets.
The COP15 is underway in Montréal as the launching happens. It’s another initiative in the financing sector that highlights the importance of pumping capital into climate change, biodiversity and nature conservation.
The Inlandsis II Fund’s $115 million capital is from 30+ investors, led by Fondaction, and includes these major ones:
Chairman of FAM and VP of Fondaction, Stéphan Morency said:
“In addition to financing corrective measures throughout industry to reduce GHG emissions, the Inlandsis II Fund will also deploy its capital on voluntary markets to ensure that efforts toward biodiversity and natural capital protection are more sustained as compared to its predecessor.”
Fighting climate change and protecting nature are closely related. That’s because nature gives us the solutions to lower our GHG emissions by sequestering carbon.
Forests are great carbon sinks, and if the trees are cut down, the capacity to store carbon is also lost. That doesn’t only impact climate change but also the local biodiversity. Thus, similar investments were meant to protect nature and tackle climate change.
According to Fondaction’s Deputy Chief Investment Officer “fighting climate change through forest preservation creates greater biodiversity, as forests often provide refuge to threatened species, but also more economic value for the forests and the communities that rely on them”.
Increasing Inlandsis II Fund’s Capitalization
Actions needed to reach the world’s 2050 net zero goals will require a huge amount of money. And so FAM and its partners expect another funding in the coming months. They anticipate that the Inlandsis II Fund’s capital will go up to $160 million.
Fondaction itself has invested a total of $54 million into the Fund, $24 million in Inlandsis I and $30 million in Inlandsis II. Commenting on the launch, CEO and co-founder of Priori-T Capital Jean-François Babin said:
“Inlandsis is one of the first investment funds worldwide to generate revenue with the carbon credits it makes available through the projects it supports. In addition to generating competitive returns for its investors, the Inlandsis Fund innovates by investing in several types of GHG reduction projects, including the reduction of methane emissions in agriculture and in abandoned coal mines.”
Priori-T Capital develops alternative investment solutions to fight climate change such as the Inlandsis Fund. It seeks to provide investors with opportunities that are carbon market-driven and open access to capital for a greener economy.
For the firm’s Chairman of the Board, launching Inlandsis II Fund gives them leverage in the impact financing ecosystem.
The Inlandsis Fund was established by Fondaction and Coop Carbone in 2017 and committed to harnessing markets to address climate change. It is the only Canadian fund, and one of the few worldwide, to exclusively finance carbon emission reductions.
The Fund provides a unique project financing solution that supplies initial capital in exchange for carbon credits — an innovation that’s vital to bringing carbon emission reduction projects to fruition. Here is Inlandsis Fund’s project map.
From Quebec to the Whole of North America
Carbon markets have grown a lot over the last 2 years as shown below. Thanks to the rising net zero pledges from large global companies. Most of these commitments include offsetting emissions by buying carbon credits.
The reason behind the carbon market growth is what inspires the creation of Inlandsis II Fund. The managing director of the Fund, David Moffat, said that the Inlandsis I Fund formed a pioneering center of climate finance expertise in Quebec.
Inlandsis I supports the following projects and initiatives:
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