Carbon credit exchanges are online marketplaces that connect buyers and sellers of greenhouse gas (GHG) credits. They are a vital piece of the overall market for climate-related investments and initiatives. As more companies commit to net-zero goals, the demand for these credits has been growing rapidly. In fact, the voluntary market for these emissions reductions has already doubled over the past year alone. This increase in demand has accelerated the growth of carbon credit exchanges.
The carbon.credit exchange market consists of two distinct parts: the compliance market and the voluntary market. In the compliance market, governments set a cap on how many GHG emissions certain sectors – such as oil, transportation, energy or waste management – can release per year. Companies can then buy credits from these projects to offset their own GHG emissions. The credits can be purchased either from those directly reducing emissions or from a middleman such as a company that pays farmers to plant trees on their land for the purpose of offsetting their own emissions.
Those producing credits can be private individuals, companies or non-governmental organizations (NGOs). The quality of carbon credit projects is assessed by a standard. These standards are a series of rules, typically established by an environmental or other nonprofit group, that define what is required for a particular project to be considered valid. For example, a reforestation project will need to follow the rules of a specific forest carbon standard.
These standards are largely voluntary but some are mandatory, such as the carbon neutrality standard in the US or the GHG Protocol in Europe. There are a number of other standards that are available, but they are less well established and often less stringent.
In the voluntary market, companies – from tech giants to airlines to car manufacturers – purchase credits to offset their own emissions. They can also use these credits to demonstrate their commitment to the environment. The buyers are typically looking to meet their own net-zero targets or to support global efforts toward a lower-carbon economy.
One of the most popular and best-established carbon credit exchanges is the Carbon Trade eXchange (CTX). CTX is a member-based spot market that welcomes a wide range of players, from single brokerages to large project developers. It offers a fast, secure and transparent marketplace where trading of standardized contracts can take place.
In addition to offering an exchange, the Carbon Trade eXchange (CTX) provides services related to project development and verification. It is a great option for traders and brokers who want to engage in the carbon market but need the help of an experienced team to ensure their success. The service focuses on the verification and quality assurance of GHG projects as well as the management of risks. The CTX team is made up of experts in the industry who are dedicated to helping businesses reduce their carbon footprint and achieve their goals. The CTX team can help with everything from developing carbon credit strategies to finding the right projects.
