Why are we doing this
Even if we were to achieve a carbon-neutral economy today, the vast amount of greenhouse gasses that have accumulated in the atmosphere over centuries will continue to drive climate change for thousands of years. This stark reality underscores the critical importance of actively removing existing carbon dioxide from the air through a process known as carbon dioxide removal (CDR), in addition to reducing future emissions.
Limitations of the current carbon credit market
However, the market for carbon credits, which is intended to fund emission reduction and removal projects, currently suffers from significant shortcomings that hinder its effectiveness and ability to scale:
Lack of transparency: Inconsistent and opaque verification practices erode trust in the true impact of credits.
Fragmentation: Varying quality standards across different markets create confusion and undermine fungibility of credits.
Illiquidity: Absence of efficient, transparent trading mechanisms limits market growth and price discovery.
These issues have hindered the carbon credit market from realizing its full potential as a key tool in the fight against climate change.
Growing demand hindered by market challenges
Meanwhile, demand for high-quality carbon removal credits is surging as a growing number of companies and governments set ambitious net-zero targets. Buyers are increasingly willing to pay premium prices for credits that represent genuine, permanent removal of carbon dioxide.
However, access to an ample supply of trusted carbon removal credits remains constrained by the market's current limitations:
Complexity: Opaque and fragmented market structure deters participation.
Lack of trust: Concerns over credit quality and integrity suppress demand.
Supply shortage: Carbon removal projects struggle to scale cost-effectively without sufficient funding.
This mismatch between growing demand and lagging supply threatens to stall the urgent scaling of CDR solutions. Carbon removal projects find themselves in a catch-22, unable to expand without strong offtake agreements from credit buyers, who in turn are deterred by the shortage of verifiably high-integrity credits available.
Permanence and transparency are ranked as two of the three most important criteria when evaluating carbon credit quality.
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