Thank you so much for this well researched article. Every time I read such interesting stuffs, feels like am little more knowledge person today than I was yesterday. Kudos !!!
Excellent insights on carbon credits.. thoroughly enjoyed reading it. Great knowledge. Have exposure to IEX if things play out well.. have been tracking EKI but no exposure yet. Thanks
Its an absolutely wonderful article on an early market, that is booming.
I was searching to understand the whole game for a long time and this article made it very simple. Many thanks for it.
As the article covers most of it from the demand side. I was wondering what are the options and issues with the Supply side. As this market is booming, Project developers (Companies) through the help of individual farmers / groups are trying to create the Carbon credits by leasing or tieup with other companies. But this is not transparent much. Appreciate ,if you could add a section on that part too in the article.
The reason, I got interested in Carbon Credits, is that I am looking to create my own Carbon credits through lands: Agro-forestry. I'm unable to find a right way to carry out this process. As small agencies who deal with this process are not clear / legible.
Thank you Neeraj. Glad you found the article useful.
The supply side on the voluntary carbon credit market is all over the place. The market is still very tiny and as such is missing standardized regulations across countries. As you mentioned the way to go through is via agencies and consultants who act as middleman. They will usually get your land, carbon reducing mechanism certified via Verra or any other prominent and internationally accepted rating agency. Only once its certified you may be able to sell the earned carbon credits to a willing buyer (which again is broker/consultant based format as there are no exchanges for voluntary carbon credit market). Agro-forestry carbon credits are also not much in demand as they lack transparency but a good consultant may be able to still help you out.
You may even try directly reaching out to Verra or Gold Standard for more information on consultants etc that can help here.
Very well structured read. Was hoping to get insights into whether a third party consultant such as EKI Energy which operates primarily in the voluntary markets has scope to work in the Indian compliance market. Does any other third party consultant or carbon asset manager operate in both markets concurrently. Given the fact that the dynamics of both markets are really different.
So EKI's current business is sort of a middle man between the carbon credit creators and carbon credit buyers. EKI has recently also 'backward integrated' into manufacturing bio fuel burners as well which are one of the popular ways to generate carbon credits in India. This is all in voluntary carbon markets.
In compliance carbon markets, it is mandated by law for an entire industry to slowly reduce their carbon emissions to the limit prescribed by the regulator. This decrease in carbon emissions comes from process innovations and upgrade of factories in the industry. For example, the Indian regulator tomorrow puts a carbon limit of 100 on cement industry as a whole for the year 2023 and distributes carbon credits to each company based on its current carbon emission size. Now its upto each company to *permanently reduce* its carbon emission. They cannot entirely buy carbon offsets in voluntary market cause next year the 100 limit will further reduce to 95 and so on every year after that.
The only real way for the cement company is to upgrade its factories and make producing cement less carbon intensive. Because the entire industry has to do it at the time, it incentivizes everyone to participate or pay fines.
EKI at present is not a technical consultant and as such I dont think they will have as much of a scope in compliance markets in India.
Thank you for the clarification. Also could you suggest publication and podcast (apart from Bloomberg Zero) that covers the Climate Tech space globally.
Tar very good article on carbon credit cycle and it's process. In between I was reading chevron presentation , what's their future found interesting. They plan to invest around 10 billion dollars for carbon capture unit.
Direct Carbon Capture is the only real way to decrease carbon emissions at source. It is also the most verifiable way to issue carbon credits. Like we explored in the article, most carbon credits are backed by false projects who routinely over estimate the impact they are creating.
Occidental Petroleum (bought by Buffett) is now building the worlds largest direct carbon capture plant. I expect most oil and gas companies to venture and build this at scale, cause carbon di oxide can actually be used as a raw material in oil extraction process.
This has been one of the most enriching articles I have come across in the last few months. Thank you very much for the detailed and well structured article.
Brilliant article. I always look forward to your articles and this one is equally rich in knowledge like the past ones. Keep up the good work of educating.
I still have a question. Who will benefit the most between EKI Energy & IEX.
EKI Energy has first mover advantage & 20 Years long experience. IEX has Strong Foundation & Team. What are your views since, EKI is developer and Supplier whereas IEX would only be a exchange?
Both are operating in different parts of the value chain
EKI so far was only a consultant, now they have also started to manufacture biomass cookstoves (which are one of the top carbon credit projects globally, esp in India). The cookstoves projects though have issues of their own (watch the video in Part 4 of the article).
IEX has been facilitating trading of Ecerts and Rcerts and is a top contender to establish a compliance + voluntary carbon market in India.
Absolutely right. EKI looks unreliable at this point as there are many questions on accuracy of Carbon Emission on such projects.
But is there any past example anywhere around the world where Digital Carbon Trading Platform is a success? Looks like Salesforce has started looking into it but it's early stage
Yes, EU Carbon Trading has been very successful. From investment perspective, this is a brand new field. Most of the ETFs that provide exposure to carbon markets didn't exist even 2 years ago.
Salesforce is the latest example of a carbon trading platform. I expect more new entrants in this space. From the perspective of an exchange it's a great business. Low capital and asset light.
Thank you so much for this well researched article. Every time I read such interesting stuffs, feels like am little more knowledge person today than I was yesterday. Kudos !!!
Thank you! glad you found it useful
The information is rich, thank you I really enjoyed it.
Thank you for reading!
Excellent insights on carbon credits.. thoroughly enjoyed reading it. Great knowledge. Have exposure to IEX if things play out well.. have been tracking EKI but no exposure yet. Thanks
Well written and simple to understand. Thanks for such a detailed write up.
Thank you for reading!
Hey Tar,
Its an absolutely wonderful article on an early market, that is booming.
I was searching to understand the whole game for a long time and this article made it very simple. Many thanks for it.
As the article covers most of it from the demand side. I was wondering what are the options and issues with the Supply side. As this market is booming, Project developers (Companies) through the help of individual farmers / groups are trying to create the Carbon credits by leasing or tieup with other companies. But this is not transparent much. Appreciate ,if you could add a section on that part too in the article.
The reason, I got interested in Carbon Credits, is that I am looking to create my own Carbon credits through lands: Agro-forestry. I'm unable to find a right way to carry out this process. As small agencies who deal with this process are not clear / legible.
Many thanks again.
Regards,
Neeraj
Thank you Neeraj. Glad you found the article useful.
The supply side on the voluntary carbon credit market is all over the place. The market is still very tiny and as such is missing standardized regulations across countries. As you mentioned the way to go through is via agencies and consultants who act as middleman. They will usually get your land, carbon reducing mechanism certified via Verra or any other prominent and internationally accepted rating agency. Only once its certified you may be able to sell the earned carbon credits to a willing buyer (which again is broker/consultant based format as there are no exchanges for voluntary carbon credit market). Agro-forestry carbon credits are also not much in demand as they lack transparency but a good consultant may be able to still help you out.
You may even try directly reaching out to Verra or Gold Standard for more information on consultants etc that can help here.
Thank you. Will check on that.
Great article and so in-depth research article. Thank you for sharing such great knowledge.
Very well researched as it is in early stage very few people knew about it. Thanks for providing all information.
Very well structured read. Was hoping to get insights into whether a third party consultant such as EKI Energy which operates primarily in the voluntary markets has scope to work in the Indian compliance market. Does any other third party consultant or carbon asset manager operate in both markets concurrently. Given the fact that the dynamics of both markets are really different.
Thank you Rishabh!
So EKI's current business is sort of a middle man between the carbon credit creators and carbon credit buyers. EKI has recently also 'backward integrated' into manufacturing bio fuel burners as well which are one of the popular ways to generate carbon credits in India. This is all in voluntary carbon markets.
In compliance carbon markets, it is mandated by law for an entire industry to slowly reduce their carbon emissions to the limit prescribed by the regulator. This decrease in carbon emissions comes from process innovations and upgrade of factories in the industry. For example, the Indian regulator tomorrow puts a carbon limit of 100 on cement industry as a whole for the year 2023 and distributes carbon credits to each company based on its current carbon emission size. Now its upto each company to *permanently reduce* its carbon emission. They cannot entirely buy carbon offsets in voluntary market cause next year the 100 limit will further reduce to 95 and so on every year after that.
The only real way for the cement company is to upgrade its factories and make producing cement less carbon intensive. Because the entire industry has to do it at the time, it incentivizes everyone to participate or pay fines.
EKI at present is not a technical consultant and as such I dont think they will have as much of a scope in compliance markets in India.
Thank you for the clarification. Also could you suggest publication and podcast (apart from Bloomberg Zero) that covers the Climate Tech space globally.
Bloomberg Green, Quartz Climate, International Energy Agency
Podcast: Zero by Akshat Rathi
Just wow. Great article and so in-depth research article. Thank you for sharing such great knowledge. With lots of best wishes and love. Thank you
Thank you for reading!
Tar very good article on carbon credit cycle and it's process. In between I was reading chevron presentation , what's their future found interesting. They plan to invest around 10 billion dollars for carbon capture unit.
Thank you
Direct Carbon Capture is the only real way to decrease carbon emissions at source. It is also the most verifiable way to issue carbon credits. Like we explored in the article, most carbon credits are backed by false projects who routinely over estimate the impact they are creating.
Occidental Petroleum (bought by Buffett) is now building the worlds largest direct carbon capture plant. I expect most oil and gas companies to venture and build this at scale, cause carbon di oxide can actually be used as a raw material in oil extraction process.
https://open.spotify.com/episode/1vgzoP7Ox9aycuBLQ7l7BS?si=trPDohifSuie8cIlVx4WzQ
https://twitter.com/itsTarH/status/1578302002333114368?s=20&t=v-uBnQaF3ph6uxfTo0osYA
This is wonderful. Thank you so much for the effort , Kudos
Very informative article
Looking forward for more articles on carbon market development
Thanks
This has been one of the most enriching articles I have come across in the last few months. Thank you very much for the detailed and well structured article.
Brilliant article. I always look forward to your articles and this one is equally rich in knowledge like the past ones. Keep up the good work of educating.
What a wonderful Article. Beautifully Written.
I still have a question. Who will benefit the most between EKI Energy & IEX.
EKI Energy has first mover advantage & 20 Years long experience. IEX has Strong Foundation & Team. What are your views since, EKI is developer and Supplier whereas IEX would only be a exchange?
Both are operating in different parts of the value chain
EKI so far was only a consultant, now they have also started to manufacture biomass cookstoves (which are one of the top carbon credit projects globally, esp in India). The cookstoves projects though have issues of their own (watch the video in Part 4 of the article).
IEX has been facilitating trading of Ecerts and Rcerts and is a top contender to establish a compliance + voluntary carbon market in India.
Absolutely right. EKI looks unreliable at this point as there are many questions on accuracy of Carbon Emission on such projects.
But is there any past example anywhere around the world where Digital Carbon Trading Platform is a success? Looks like Salesforce has started looking into it but it's early stage
Yes, EU Carbon Trading has been very successful. From investment perspective, this is a brand new field. Most of the ETFs that provide exposure to carbon markets didn't exist even 2 years ago.
Salesforce is the latest example of a carbon trading platform. I expect more new entrants in this space. From the perspective of an exchange it's a great business. Low capital and asset light.
It's a marvelous article. I cannot even imagine how hard you have worked for this super detailed article. Thank you so much and kudos to you