What is Carbon Market?

The carbon market refers to the market in which carbon credits, in other words carbon certificates, are obtained and sold within defined standards for the prevention or reduction of GHGs.

Carbon markets aim to reduce greenhouse gas (GHG, or “carbon”) emissions by setting limits on emissions and enabling the trading of emission units (Carbon Credits), which are instruments representing emission reductions(ER). Emission Reduction means Carbon Credit.

What is Carbon Credit?

It is a permit which allows a country or organization to produce a certain amount of carbon emissions and which can be traded if the full allowance is not used.

A Carbon Credit is a unit representing one ton of Carbon Dioxide equivalent that is prevented from being emitted into the atmosphere (emission avoidance/reduction) or removed from the atmosphere. In simple words "1 Carbon Credit means 1 tone of CO2 reduce/remove from the atmosphere."

The ultimate goal of carbon credits is to reduce the emission of greenhouse gases into the atmosphere.

What is Carbon Trading?

Carbon trading is the process of buying and selling permits and credits that allow the permit holder to emit carbon dioxide. It has been a central pillar of the EU’s efforts to slow climate change.

The model used in all current carbon trading schemes is called ‘cap and trade’. In a ‘cap and trade’ scheme, a government or intergovernmental body sets an overall legal limit on emissions (the cap) over a specific period of time, and grants a fixed number of permits to those releasing the emissions. A polluter must hold enough permits to cover the emissions it releases. Each permit in the existing carbon trading schemes is considered equivalent to one tons of carbon dioxide. In the model, permits are to be sold – usually by auction – so that from the outset, polluters are forced to put a price on their emissions, and are incentivized to reduce to a bare minimum the permits they seek.

Carbon Credit is the currency of Carbon Trading, generally we call Credits. Example- Like normal trading occur between MONEY similarly carbon trading occurs between CREDITS. Example- if some company/organization has emitted 1000 tons of CO2 and that company wants to compensate this 1000 tons of CO2 - how do they do that ? They'll compensate 1000 tons of CO2 by purchasing 1000 credits. These buying & selling of carbon credit is called Carbon Trading.

How Carbon Market Works?

  • First project will go under Registration & Validation stage in which project will be validate by the VCR (Voluntary Carbon Registry) Platform based on the Project Concept Notes (PCN) & Estimated ER sheet. PCR is basic document of any Carbon Market Mechanism in which general information of the project included i.e. Applicability criteria, location, estimated carbon credits, carbon credit calculation methodology, etc. Estimated ER Sheet is a excel file in which as per approved methodology, credits will be calculated.
  • After Validation, the project goes for monitoring stage in which certain parameter is monitored by the Project Authority. Monitoring Period/Stage means a period for which carbon credit are claiming like for one year, two year, etc.
  • After approval from the VCR, the carbon credits will be issued and come into registry from there, they will be traded.
  • For Validation, the PCN, and ER sheet & along with some documents submitted to Carbon Auditor and then submitted to VCR Platform.
  • Next step will be Verification in which based on the monitored parameter, actual carbon credit will be calculated from MR (Monitoring Report, ER Sheet) and submitted to Carbon Auditor then VCR Platform for approval.
    Note: - Verification has to be done / conducted periodically for generating revenue periodically.
  • After trading of credits, the net revenue will be share to client.

How Revenue is generated to Client and its Time Frame?

CoU Generated by Project in 1 Year 40,000 CoU
Selling Price in USD 2.00 $
Gross Revenue in USD 40000 * 2 $ = 80,000 $
Expenses like (Registration fees, Validation & Verification Auditor fees, Consulting fees, ETC..) in USD 30,000 $
Net Revenue in USD 80,000 $ – 30,000 $ = 50,000 $

Field in which Carbon Credits can be claimed

  • Energy Industries (renewable /non-renewable sources)
  • Energy Demand
  • Chemical Industries
  • Metal Production
  • Agriculture
  • Energy Distribution
  • Manufacturing Industries
  • Transport
  • Waste Handling and Disposal
  • Construction

SYNERGYTECH INFO SYSTEMS SERVICES AS AN AGGREGATOR

  • Selection of the VCR (Voluntary Carbon Registry) Platform as per the project.
  • Project Registration on the Selected VCR platform.
  • Preparation and submission of Project Concept Note (PCN), Monitoring Report and other documents.
  • Preparation and submission of media required for upload to VCR Platform.
  • Hiring of third party auditor or verification agency to carry out verification of the carbon credits as per Selected VCR Platform.
  • Submission of audited Verification Report and Statement to VCR Platform.
  • Coordination with the VCR Platform regarding the Submitted Reports, till the issuance of the Carbon Credits.
  • Sourcing, negotiating and trading of carbon credits with buyers.