A new nonprofit organization called Climate Vault is hoping to trap CO2 emissions via financial markets. It offers reliable carbon offset permits for companies and people willing to reduce their GHG emissions.
The organization is founded by Dr. Greenstone – a professor at the University of Chicago and a former White House chief economist during the Obama administration. Other members are Don Wilson – chief executive of DRW Holdings LLC and a senior adviser to the president at the University of Chicago, and Andrew Dailey – a managing director of MGI Research LLC.
Climate Vault serves the current cap and trade emissions market that allows companies to offset their carbon emissions with pollution permits. Organizations can purchase emissions permits from Climate Vault that uses the cap and trade markets in California, Quebec, and northeast and mid-Atlantic states.
The company then takes the permits off the market so that industrial emitters will not be using them, which is essentially the “vault” part of its operations. The permits go to providers of carbon removal services that can then sell them back into the market to finance their efforts.
“We were intrigued by the idea of purchasing and retiring credits from the regulated market and eventually using those to potentially fund carbon-capture technologies,” said Maryanne Hancock, CEO of Y Analytics, a division of private-equity firm TPG – an early donor of Climate Vault.
Climate Vault Solves Carbon Offset Markets Pitfalls
Carbon offset programs is a growing market niche as investors and companies direct billions of dollars into sustainability-focused financial products. Companies are also in a need of buying carbon offset credits due to emissions limits being imposed on them. However, sometimes ensuring the integrity of available carbon offsets is tricky which is a problem Climate Vault is aiming to solve.
The company buys credits from regulated cap and trade markets and makes voluntary carbon removal initiatives more official with a formal permits system. It solves the problem with credibility and opacity of voluntary offset programs.
Climate Vault also wants to work with carbon removal technology companies or projects that use natural processes to sequester CO2 from the atmosphere. Carbon capture is a technology that could be highly effective in reducing carbon emissions enough to limit climate change.
When CO2 removal companies succeed in taking out emissions, Climate Vault pays them with the carbon permits it has vaulted away. The companies can then sell those permits on the carbon market for cash.
Climate Vault offers a new approach among carbon offsetting companies that makes sure seekers of reliable carbon offset credits can count on the integrity of the permits they purchase to reduce their emissions. They use the funds they get to also invest in carbon capture technologies and other CO2 removal solutions.