CAD Trust, a carbon meta-datahub hosted by Singapore, targets to connect with almost all independent registries by Q4, consolidating data from nearly 100% credit issuers globally in the voluntary carbon market (VCM), Dinesh Babu, Executive Director of the platform, said in a recent interview.
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CAD Trust was jointly launched by the International Emissions Trading Association (IETA), the World Bank, and the government of Singapore last December.
Currently, VCM is a decentralized system, with different registries following different methodologies to issue credits, and data related to these credits has also been kept separately by individual registries in diverse formats.
Having a global datahub that consolidates information from different registries will tame the chaotic record keeping in current VCM, helping governments and corporates better track emission trading, analyze and compare different carbon assets.
"We expect that, by Q4 this year, we will be connecting to almost all of the independent registries, making close to 100% coverage of the independent registries," Babu said.
He said CAD Trust has started onboarding the registries since January this year.
"Many of them have been part of the simulation for the last three years, so the confidence level is very high. Right now, we have three registries on board – EcoRegistry, Global Carbon Council and BioCarbon Registry."
Initially, CAD Trust aimed at connecting with Verra, Gold Standard, and American Carbon Registry by early 2023, which jointly accounted for about 90% of the VCM's credit issuance volume today.
"There are various kinds of processes that the independent registries have to cross-check before they connect," Babu said when being asked about the reason behind the delay in getting these major players onboard.
"On the operational side, we are working very closely with them and trying to see how independent they are, how comfortable they are, and how secure they are in terms of connecting with us. That is taking some more time."
"Also, there is beauty not only in just onboarding them, but also getting more data to flow. Therefore, it is very important that we connect as soon as all the data is readily available."
Onboarding national registries next
"[Onboarding] the national registries is definitely the next step," Babu said.
He said many countries have realized the importance of setting up their own national registries for the environmental markets, driven by the upcoming implementation of the Paris Agreement's Article 6, and the fulfillment of their domestic climate targets.
"Many countries are now making some efforts to understand and decide what their national registries need to be. Countries are thinking whether they should have only a carbon registry or an environmental asset registry or adding biodiversity and other aspects..."
"We are blessed to have both World Bank and UNDP [United Nations Development Programme] working together in at least 30 countries. Therefore, discussions [about the national registries] are being initiated with these partner countries."
He added, to get more data to flow through the platform, CAD Trust plans to approach countries that already have a good track record on data and connect with them first.
"Connecting with the national registries is our medium-term [plan], I would say."
Supporting Article 6
"Supporting Article 6 system has become a very important part of the whole design of CAD Trust," Babu highlighted.
He said the CAD Trust will help countries to standardize and streamline emission accounting and reporting required by the United Nations Framework Convention on Climate Change (UNFCCC).
"So, once the national registries are connected to CAD Trust, [emissions] reporting under Article 6 becomes very easy for them, which means the administrative burden is reduced."
Meanwhile, CAD Trust will track whether carbon credits have been authorized for corresponding adjustment (CA), which is required under Article 6 when a carbon credit is exported to another country, to avoid double counting of emission reductions at both seller and buyer's ends.
"Registries of both developed and developing countries need to communicate with each other. So, CAD Trust is going to provide this kind of facility to support data transfer and transactions of carbon credits," Babu said.
Onboarding the users
Babu said CAD Trust recently established a user forum with about 20 members from various service layers in the carbon industry, including rating agencies, exchanges, consultancy companies and analytical agencies.
"We are having discussions with them to find out how the benefits [brought by CAD Trust] can be showcased."
"For example, in Singapore, we have a few exchanges that have the ability to trade carbon credits issued by multiple registries. For them, CAD Trust becomes a one-stop shop. They can come to CAD Trust, start downloading the data and try to do the reconciliation of what they are trading."
CAD Trust is the centerpiece that supports all activities within the World Bank's Climate Warehouse, which is an initiative that aims at digitizing the ecosystem of the carbon industry and automating emission monitoring, reporting and verification.
Demonstrating the user cases of certain tools of CAD Trust and the broader Climate Warehouse is going to really change the perspective of the carbon market players, Babu said.
"They'll have more confidence in terms of trading these carbon assets in a manner that has never been done before and achieve more transparency and environmental integrity."