Carbon market intelligence company Viridios AI has unveiled a new platform it hopes will take the guesswork out of purchasing carbon credits and make voluntary carbon markets more accessible and transparent.
Voluntary carbon markets or VCMs allow carbon emitters to offset unavoidable emissions by purchasing carbon credits in projects that remove or reduce greenhouse gases, from the atmosphere.
VCMs “enable organisations to compensate for or neutralise emissions that have not yet been eliminated, by financing projects that reduce or avoid emissions from other sources, or that remove greenhouse gases from the atmosphere,” according to the McKinsey Global Institute.
The Taskforce on Scaling Voluntary Carbon Markets estimates that the market for carbon credits could be worth $50 billion as soon as 2030 and could remove more than 2.0 gigatonnes of carbon dioxide annually, to help limit global warming to 1.5 degrees.
The problem, according to Viridios AI, is that carbon markets inherently lack transparency because they are complex, dynamic and segmented.
Transactions are over-the-counter, meaning they take place outside the stock exchange system and are based on bilateral agreements among market participants (a broker being the middleman).
The company, which is a subsidiary of Viridios Group, is now attempting to solve this problem through the launch of a new platform that provides VCM participants with complete and up-to-date market intelligence and complete carbon offset project information that they require in order to transact.
This includes dynamic pricing for specific carbon projects, end of day marks and project details.
The tech and valuation methodology has been validated through partnerships with S&P Global Commodity Insights and risk advisory firm Mobius Risk Group, which uses VAI data to track clients’ carbon footprint and provide real-time valuation of carbon offset portfolios.
According to Viridios AI, market data was previously only available based on aggregate information to give an approximate valuation, meaning that asset managers haven’t been able to advise investors adequately.
This new dashboard provides an accurate price for specific carbon projects.
The company hopes the platform will become “an essential tool for all market participants, delivering the organised and verified information they need to participate in the market and make investment decisions with confidence,” Viridios AI chief executive officer Marcelo Labre said.
“The highly fragmented and unregulated nature of the VCM, low liquidity with the majority of transactions conducted over-the-counter, and valuation methodology discrepancies, result in a lack of transparency.”
Providing greater transparency is not only beneficial for asset managers and companies trying to offset emissions, but also important for companies and communities offering carbon offsets to get a fair and transparent price for the carbon credits they are selling.
In addition, the platform assesses what it calls the co-benefits of a project – contributions toward the 17 UN Sustainable Development Goals – that shine a light on nonmonetary value that listed projects offer.
The AI software pulls information from a range of sources, including brokers, historical data, Compliance Carbon Markets, systemic economic conditions, and benchmarks including energy markets and proprietary trading data. While this data was available before, it wasn’t available at this level to any subscriber.
Viridios AI hopes that providing greater transparency will make VCMs more accessible.
The platform is adding new projects each week with the goal to list thousands more within the next few months.