Carbon Credit Exchange - How Can Companies Buy Carbon Credits?

markenowens

The carbon market is a trading system that enables individuals and companies to purchase and trade greenhouse-gas (GHG) emissions permits, which represent 1 ton of CO2e. These credits can be used to offset emissions that come from industrial production, travel or transport.

These credits are issued by a variety of different projects around the world, and can be bought through either a voluntary or compliance carbon market. The latter is regulated and has rules that must be followed to comply with emissions regulations, such as the Kyoto Protocol.

While compliance markets are governed by regulatory frameworks, voluntary carbon credits do not follow these rules and are often free-market, unrestrained by national borders or political unions. They are also more flexible than compliance markets in terms of how many companies can participate and how many regions they can serve.

Xpansiv is a global marketplace that trades ESG-inclusive commodities like carbon, renewable energy certificates, and Digital Natural Gas. The exchange offers an intuitive, user-friendly environment for trading these assets in a secure and transparent manner that is based on deeper data.

One of its main business units is the carbon credit exchange, the largest spot exchange for voluntary carbon credit transactions worldwide. The platform allows clients to trade a wide range of carbon offset projects from major registries.

A key advantage of the standardized products offered by exchanges is that buyers can compare them on a single platform and determine which ones best meet their requirements, without having to spend time and resources evaluating offers offscreen. This can help buyers avoid potential greenwashing and ensure they are buying credits that have been vetted by a reputable certifying authority, avoiding costly mistakes.

Another advantage of standardized products is that they offer the opportunity to buy a limited amount of credits, thereby reducing risk and cost for businesses that may not be ready to commit to a large volume of purchases. But the standardized offerings of these platforms do not always offer project-specific information until after the transaction has been completed, which can make it difficult to know exactly what you are purchasing.

If a company needs to buy a large quantity of credits, the RFP process can be cumbersome and time-consuming. However, a broker like CarbonBetter can simplify this process by taking title to the credits on the buyer’s behalf and handling the entire RFP process, counterparty considerations, clearing risk, evaluation, and retirement of credits purchased on your behalf.

In addition to helping businesses source and buy the credits they need, a broker can also help them assess their risks and provide guidance on how to mitigate them before committing to any transactions. The brokers also offer additional services that can reduce the costs of carbon trading, such as carbon footprint calculations and carbon offset project development.

The carbon credit market is growing rapidly and is expected to reach $2.4 trillion in 2027. The growth is driven by the increasing demand for carbon offsets from companies, governments and other organizations that are setting net-zero targets or looking to hedge against environmental risks. The most important factors to consider when choosing a carbon exchange include its liquidity, risk clearing capacity, and ease of use.