According to a McKinsey report, global demand for voluntary carbon credits is expected to increase fifteenfold by 2030 and a hundredfold by 2050. Having a credible market and quality standards for carbon credits will be essential. There’s an ongoing coming together of market sentiment, enabling regulatory frameworks, market standards, cutting-edge technology and a progressively more sophisticated carbon offsetting value-chain.
Carbonplace aims to connect exchanges, marketplaces and registries across the world, and contribute to the development of the carbon market infrastructure. It leverages its partner banks’ capabilities to ensure reporting and traceability through the entire carbon credit trading process.
Earlier this year, UBS joined Carbonplace as a founder member. The platform seeks to provide UBS, along with our peers and clients, with digital wallets where they can store and trade carbon credits. The carbon credit lifecycle, including the retirement process, is all managed on a single blockchain, creating a fully transparent audit trail, secure market infrastructure and a solution to many current market challenges. The consortium currently operates as a group of nine banks (UBS, NatWest, Standard Chartered, BNP, NAB, Itaú, CIBC, SMBC, BBVA).
To test the platform and leverage the UBS carbon ecosystem, we have successfully executed two pilot trades, both of which involved buying a small quantity of carbon credits as part of the firm’s portfolio of carbon offsets to address emissions from our own operations. The first seller was Carbon Tanzania, a social enterprise developing landscape conservation in East Africa and a UBS Optimus Foundation partner. The second was an existing client with no robust mechanism to sell their credits given the current market structure, yet who was looking for a market for their project funding activities.
These pilot transactions allowed us to validate the platform, navigate and understand the internal process surrounding carbon markets while demonstrating both transaction models to our clients – offering valuable lessons that will help shape the Carbonplace platform and business model going forward.
