The carbon credits market marks a key milestone that would increase the supply of credits globally. AirCarbon Exchange (ACX) – the decentralized blockchain-based platform mirroring commodity markets, announces it hosted the first trades of the newly launched Global Emission Reduction Contract, or GER.
The Global Emission Reduction Contracts are legally binding contracts that allow one party to deliver verified carbon credits to another. They were created by Net Zero Markets in an effort to address the pain points of the voluntary carbon market (VCM).
Back at the beginning of 2022, Net Zero Markets signed agreements with the European Energy Exchange (EEX) and AirCarbon Exchange (ACX) to list the GER contracts on their platforms. The first one went live on ACX on Friday, June 17th, and traded at between $7.23 a tonne to $7.60 a tonne with Bioeconomy.
Net Zero Markets sees addressing the key challenges of voluntary carbon markets as setting a single price for carbon credits. The clear price of a tonne of carbon is considered to unlock investments into climate mitigating activities globally.
It would also increase their widespread availability and use which according to Net Zero Markets is critical for increasing the liquidity necessary for the voluntary carbon markets to scale, ultimately supporting the net zero target.
The new contracts could be purchased from ACX along with four other sub-contracts that are part of GER. The four sub-contracts consist of the:
- Base Carbon Contract that covers the renewables and energy efficiency sector
- Forestry Carbon Contract, encompassing the agricultural, forestry and land use sectors
- Prime Carbon Contract for those projects with additional benefits that meet at least three of the United Nations Sustainable Development Goals
- Carbon Capture Contract that covers projects providing long-lived removal of carbon emissions, such as biochar projects.
“We’re obviously pleased that the GER was up and trading on its first day and pleasantly surprised by the positive interest that it has generated in such a short space of time… We’ve spent two years perfecting the GER and it ticks a lot of boxes for investors as well as the corporates and individuals that it was designed for,” said Louis Redshaw, CEO of Net Zero Markets.
Carbon markets are an important mechanism for providing the opportunity to companies to make up for the emissions they cannot fully eliminate in the short term. Phasing out carbon emissions of large or small organizations entirely is a time-consuming process and is often not realistic to happen overnight.
However, Net Zero Markets and other carbon credit developers need to focus more on ensuring the quality of the credits rather than their fast adoption from the market. The availability of credits that don’t live up to their promise of actually eliminating emissions are pointless and undermine the credibility of the whole market.