♻️Carbon Credit

Sustainability: Not Just Green, But a Measure of Good

How do we use the carbon market?

The expected increase in the price of carbon credits will put increasing pressure on the most polluting industries to reduce their carbon emissions, but the majority of economic operators will not be bound by this compliance pressure. At the same time, the voluntary market offers these companies the possibility to offset their carbon footprint, which is increasingly expected by investors, financing banks, market partners or even customers.

In Europe alone, 8-9,000 companies are covered by the compliance market, the so-called EU ETS. The annual emission quota allowed is set by the European Commission, and companies have to fit into it. If the free allocation does not cover emissions, they have to buy additional allowances on the market. They participate in several exchanges.

Similar schemes operate in the UK, several US Member States, South Korea, and New Zealand. The Chinese national scheme so far only covers energy companies, but there are similar schemes to the EU ETS in several industrialized regions.

It is not only companies subject to quota regulation that are under pressure. Many companies believe that they will be at a competitive disadvantage if they do not take action in this area. Of course, the preferred option is for everyone to reduce their emissions in-house, but if this is not possible, they can offset their emissions with so-called credits from projects.

2021 was also a record year for the voluntary compensation market, with an unprecedented number of projects registered and more than $2 billion worth of credits purchased by companies.

In 2022, significantly fewer new projects have been registered due to the recessionary sentiment and rising interest rate environment, which could lead to a tighter supply side and higher prices in the future. Thus, carbon credit trading is expected to become an important segment of the economy. The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), with the technical support of McKinsey, estimates that demand for carbon credits could increase at least 15-fold by 2030 and up to 100-fold by 2050. Overall, the carbon credit market could reach $50 billion by 2030.

Today, it is no longer enough to merely pretend to be sustainable.

The race is on to see who can take a measurable and credible step towards a greener future. Examples include Microsoft and the blockchain world's Polygon network. We believe that the fact that such large companies are making carbon-neutral commitments sends a strong message. "Sustainability, especially in the corporate world, now has methodologies like accounting," meaning that seemingly sound commitments can be held accountable on a data basis.

Sustainability has three pillars: economic, social, and environmental, but often only the latter is associated with it. Economics implies that it is not a sin to make a profit. Society is about how we operate, and how transparent a company's financial practices are.

WPF wants to work with partners that not only give the appearance of giving (greenwashing) but also do their best to be carbon neutral or climate positive.

There are three main players in the carbon credit trade:

1. Generators: These are organizations that are licensed to offset carbon emissions by selling carbon credits. Offsetting carbon emissions can be done in various ways, such as planting trees, building wind farms, or carrying out other activities that benefit the environment, such as turning waste into green energy. Any organization with a carbon credit surplus can also act as a generator.

2. Buyers: These are entities that purchase carbon credits from generators to offset their environmentally damaging activities

3. Issuers: These are entities that control the carbon emissions of individual industries or entities and set a cap on emissions each year, while validating and verifying the carbon offsets of the generators.

Waste Power Finance is one of the generators and stands out among them for its activities. Our activity in the Carbon Credit market is so novel that until now there was no protocol for generators to validate the Carbon Credit quota for this type of waste destruction. At the request of our company, the development of this protocol started at the end of 2022. Already, at the moment of launching the development, market actors (buyers) have indicated their need to tie up our future Carbon Credit production capacity.

Our company is committed to blockchain technology, and we would like to use our valuable Carbon Credit quotas in the future to green the Polygon network first and BTC (POW) mining second. We plan to identify companies with whom we can enter into long-term partnerships for this purpose.

The demand for the carbon credits we generate is huge and is likely to remain so for many years to come. Therefore, this pillar will also be a secure source of income for WPF Ecosystema.