CRBN, the world’s most impactful carbon avoidance offset program, is changing the voluntary carbon market.

A unique voluntary carbon offset backed by oil and gas, CRBN guarantees that 100% of the underlying resources remain where they belong: in the ground. CRBN can make that promise because of the nature of its unique reserves (which are literally frozen in sand) and by leveraging cutting-edge blockchain technology to ensure transparency and accountability, making the asset available to everyone, everywhere.

In this article, we’ll examine the defining features of CRBN and explore its position within the current carbon market. We’ll start with an overview of how carbon credits work, followed by a discussion of the current state of the market and the challenges it faces. Finally, we’ll consider CRBN’s position and how it will benefit from the next wave of exponential growth in this sector.

What are Carbon Credits?

Today, market participants mainly use carbon credits to either offset expected emissions or as a speculative investment.

Each credit is like a pre-paid ticket that allows the holder to emit a certain amount of greenhouse gas in exchange. Thus, holders who need to participate in activities that may have an unavoidable environmental impact will use carbon credits to “offset” those emissions, leading to a carbon-neutral outcome. However, buyers can also use carbon credits to speculate on the future value of carbon and the value of the underlying projects issuing the credits. And while the carbon credit markets have the potential to grow exponentially over the 2020s¹, participating in them is not just an investment, but an opportunity to join in a global movement to protect our planet for future generations to come.

How Do Voluntary Carbon Credits Work?

Businesses and individuals can use voluntary offsets to mitigate their impact on the environment. Companies are also motivated to participate because their involvement is seen as a model for environmental stewardship. Each carbon credit represents the removal or avoidance of 1TN of carbon dioxide emissions from the atmosphere and is usually generated by projects that reduce emissions (renewable energy or energy efficiency). While some projects are currently pursuing methods to remove carbon dioxide from the atmosphere (reforestation or afforestation projects), the technology required to have a meaningful impact using removal methods does not yet exist.

Voluntary carbon credits provide a flexible mechanism for individuals, companies, and governments to offset their carbon emissions. By purchasing these credits, they can effectively neutralize part of their carbon footprint. This is particularly useful for entities that cannot easily reduce their emissions directly, either due to technical constraints or high costs.

Voluntary carbon credits also stimulate investment in low-carbon technologies and practices. By creating a market for carbon reductions, they provide a financial incentive for developers to pursue other means of monetizing their assets, driving innovation, and accelerating the transition to a low-carbon economy. However, it’s important to remember that buying carbon credits is not a complete substitute for reducing one’s emissions.

How Can I Personally Reduce Emissions?

Buying voluntary carbon credits can help balance unavoidable emissions. However, in addition to purchasing carbon credits, individuals and organizations should also strive to reduce their emissions as much as possible using methods such as improving energy efficiency, switching to renewable energy sources, or adopting more sustainable practices.

Personal lifestyle changes can also make a difference. This includes things like reducing energy consumption, recycling, using public transportation or biking instead of driving and buying local products rather than imports. Every little bit helps and if we all chip in, everyone can be part of changing the voluntary carbon market: together we can make a difference.

Current Market and Projections

The voluntary carbon market has grown rapidly in recent years, driven by increasing awareness of climate change and by the commitments of companies and governments to reduce their carbon emissions. Voluntary commitments could make up as much as 60% of demand by 2030, and grow 100x by 2050².

Since 2015, the compound annual growth rate (CAGR) of the voluntary carbon market has been around 30%, which reflects the increasing demand for carbon credits as more entities seek to offset their emissions². However, the market is still relatively small compared to the scale of the climate challenge and will need to grow (from $2 billion in 2020) to around $250 billion by 2050³ if it is going to address the problem.

One of the key sources of demand for voluntary carbon offsets is the commitment by many of the world’s largest companies to achieve net-zero emissions. These companies will continue to purchase carbon credits to offset their emissions and thus continue to drive demand. However, there are concerns that the supply of carbon credits may not be able to keep up with this growing demand.

The top-five Big Tech companies, for example, could cause a supply shortage of carbon credits by 2025 if they opted to cover just their Scope 3 emissions².  The Greenhouse Gas Protocol categorizes GHG emissions into three ‘scopes’, with Scope 3 being emissions occurring outside a company’s own operations (like business travel, commuting, disposal, transportation, etc.).  While analysts expect that supply will increase over the coming years, they believe it will lag demand until the second half of the decade. If there is ever a supply shortage, the cost of offsets will likely increase substantially.

Current Market Dynamics

The voluntary carbon market is complex and rapidly evolving. According to Accenture, 34% of the world’s largest companies have committed to net zero, but 93% will fail unless they double their pace⁴. This highlights the urgent need for more action now and faster progress in reducing emissions. It isn’t surprising that McKinsey Sustainability projects a 100x increase in global demand for voluntary carbon offsets by 2050, underscoring the growing importance of the voluntary carbon market in the global effort to combat climate change⁵.

The market also faces some challenges. One of the main challenges is the potential for a significant increase in carbon offset prices—according to Bloomberg Markets as much as 3000% by 2029¹—which could make offsetting emissions significantly more costly in the future, thus straining companies and investors in the pursuit of profitability. The voluntary carbon markets are also notoriously opaque and this lack of transparency and failure to enforce accountability have left many concerned about their future⁶.

The voluntary offset market and its many participants must address these issues in order for investors and producers to maintain their confidence in the market and ensure its continued growth.

Challenges with Voluntary Carbon Offsets

Changes Needed

Our planet needs effective, well-planned, and well-executed voluntary carbon markets. And while we’ve seen how previous attempts have fallen short, CRBN now provides the model for how we can achieve this at scale by addressing the twin challenges of accountability and transparency head-on.

The London School of Economics examined the incentives of the current registry model for voluntary carbon markets and concluded, simply, that “the incentive structure is wrong”⁷. These problems arise mainly from the fact that the financial interest of registries creates a potential conflict of interest with the projects they list. Such skewed incentives end up saturating the market with low-quality assets, uncertain valuations, and anxiety about relying on them to accomplish the offsetting many companies are not yet mandated to perform.

The voluntary offset markets must meet higher standards for listing and managing assets. They cannot depend on a single registry or small group of authorities but must allow any high-quality asset to service the needs of the market while leveraging the properties of a decentralized, public ledger to provide complete transparency, pulling the retirement data into every registry around the globe.

Aligning Incentives: Why Oil and Gas Offsets Are a Solution

Unlike most voluntary carbon offsets, CRBN is backed by oil and gas. This eliminates the risk of impermanence, and ensures 100% avoidance: if you don’t drill, the oil doesn’t move. And by drawing on close to a century’s worth of cumulative engineering and assessment experience across the oil and gas industry, CRBN ensures the most accurate and accountable verificatIon of its reserves now and in the future.

CRBN’s use of oil and gas as underlying assets aligns the incentives of both producers and investors. Producers can meaningfully contribute to the transition away from fossil fuels by developing alternative successful business models that will continue providing value to customers around the globe. At the same time, CRBN offers an attractive investment opportunity: Because it is the only carbon asset with no long-term risk (unlike even other oil and gas-based offsets whose resources shift in pools underground), CRBN provides investors with the first opportunity to capture the potential 3000% increase in value by 2030 that analysts predict.

CRBN is not just another carbon offset program but a pioneering solution that addresses the critical challenges of impermanence and trust in the carbon offset market. By leveraging the strengths of its underlying assets and digitally native properties, CRBN has set a new standard for the voluntary offset market and provides new hope for the fight against climate change.

Regulated and Trustworthy: Solving Problems Using the Liquid Network

Issuing, distributing, and managing CRBN on the Liquid Network provides complete transparency and accountability to the voluntary offset markets. Once regulators have certified the assets, their listing and transfer occur trustlessly on a public ledger, allowing anyone, anywhere to buy, sell, or retire offsets.

The combination of CRBN’s underlying assets and its issuance on a public ledger also removes the problem of “double counting,” which countries and regulators have thus far been unable to solve. This unprecedented level of transparency and accountability will set new global standards for producers and investors, introducing new efficiencies into the carbon markets.

Issuing CRBN on the Liquid Network makes it transparent and secure and provides an immutable record of each transaction – a level of transparency unprecedented in the carbon market, all thanks to CRBN’s use of blockchain technology.

CRBN is not just a carbon credit; it’s a sea change in the carbon market. By leveraging the power of blockchain technology, CRBN is setting a new standard for transparency, accountability, and efficiency – taking a bold step forward in our effort to combat climate change.

Why CRBN Will Work For Investors and the Environment

The combination of CRBN’s underlying asset (oil and gas), the technology it exists on (blockchain) and the market it operates in, will change voluntary carbon offsets forever.

CRBN: Changing the Voluntary Carbon Market

As we move towards a more sustainable future, the role of carbon offsets, and particularly avoidance offsets, will become increasingly important. And while this type of offset is currently the most impactful, their relatively low cost doesn’t provide enough incentive for producers or investors to adapt their business models to the changing world. CRBN changes this by aligning both the short and long-term incentives of producers and investors to create the first viable pathway for oil and gas producers to transition to a renewable future.

We cannot reach global emissions targets without incentivizing oil and gas producers to “keep it in the ground.” However, achieving this goal through legislation alone is not feasible, as it could lead to regulatory arbitrage, similar to what we see with Russia selling cheap oil to India. Instead, CRBN relies on market incentives. It demonstrates that issuing voluntary offsets based on oil and gas reserves can be both profitable and provide the foundation for developing the business models and technologies that will define the oil and gas industry in the 21st century.

The beauty of CRBN lies in its decentralized nature. While centralized systems may be easier to build, they often respond poorly to market incentives. On the other hand, decentralized systems, though challenging to establish, more accurately reflect price signals and market incentives. They are more secure, robust, and scalable. And the team behind CRBN has met these architectural challenges. CRBN is the base layer of the new, decentralized voluntary carbon market—a digital commodity that will incentivize companies to reduce their carbon footprint. This innovative approach to carbon offsets will revolutionize the market, making CRBN the leader in our transition to a carbon-neutral economy.

CRBN’s Map to Liquidity

Liquid markets are the lifeblood of any robust financial ecosystem. They allow producers and investors to express their views accurately, facilitating strategic planning for the future. However, achieving liquidity can be challenging and hinges upon balancing a multitude of variables.

For voluntary carbon markets, fungibility — the ability for assets of the same denomination to be interchangeable — is currently the most significant barrier to deepening liquidity. Consider this scenario: how does an individual holding forestry offsets based on assets in Tennessee trade with someone holding forestry offsets based on assets in the Amazon basin? How does either of them trade with someone holding oil and gas assets based in Canada or reduction offsets based on cooking stoves in India? If market participants can’t trade directly with each other, how many intermediaries must be involved to facilitate regular business transactions?

Inefficiencies undermine the existing system, but CRBN is changing the game. By using oil and gas as underlying assets, CRBN establishes a standard akin to any other commodity: whether the asset is located in Alberta or Texas, one tonne of avoidance is equivalent to another tonne of avoidance. This makes CRBN the first completely fungible (interchangeable, tradeable) carbon offset. While we may see niche sectors of the avoidance offset markets continuing to develop over the coming years, CRBN set the standard against which those assets will be measured.

CRBN: Key Points 

1. CRBN is transparent. The Liquid Network blockchain ensures this from issuance through retirement, eliminating the need to trust third parties when buying, selling, or retiring offsets. This level of transparency is unprecedented in the voluntary carbon market and is a major advantage.
2. CRBN has solved the double-counting problem. By issuing on a public blockchain, CRBN removes the need for trusted third parties, ensuring that anyone, anywhere can verify the authenticity of their offsets against the circulating supply, thereby eliminating the possibility that more than one party could claim the offsets. This is a significant achievement that enhances the integrity and credibility of CRBN.
3. CRBN is backed by oil and gas – a significant departure from existing voluntary offsets that are based mainly on agriculture or forestry assets. This gives CRBN unmatched permanence and reliability. It also means that CRBN can guarantee 100% avoidance.
4. CRBN is on a path to becoming the global solution for the voluntary carbon market. It is currently being reviewed for final approval as a regulated carbon credit market and intends to pursue numerous exchange listings for distribution and liquidity. In addition, the team behind CRBN is planning to go beyond avoidance and plant trees in all land zones at the sites where they hold their reserves. This comprehensive approach sets CRBN apart and positions it as a leader in the voluntary carbon market.

Conclusion

CRBN is changing the voluntary carbon market, setting new standards, and paving the way for a sustainable future. We’ve seen why CRBN could do well for investors in this rapidly expanding market. But it is, really, the first hope we’ve had for meaningfully addressing climate change. It’s a testament to the power of innovation and technology have to address global challenges, and to deliver both financial and environmental sustainability. It’s a call to action for all of us to play our part in preserving our planet for future generations. So, are you ready to join the movement?

Let’s keep it in the ground!

References

1. Carbon Offsets Price May Rise 3,000% By 2029 Under Tighter Rules; https://www.bloomberg.com/professional/blog/carbon-offsets-price-may-rise-3000-by-2029-under-tighter-rules/
2. Shell Report on Carbon Credits; https://www.shell.com/business-customers/trading-and-supply/trading/news-and-media-releases/shell-and-bcgs-new-report-shows-accelerated-growth-in-carbon-markets.html?bid=%405wavkiHphKI8U_hI1pyze_D8V3lJlJDkMa9BUAsnkLd37_cViFmdU55eyb3lhExu9OkmI27oCyxg7bUjevu8EH6GNw77d9KZessg5hQP9fu6rawf&cid=DM22498&deliveryName=DM22498
3. Where the Carbon Offset Market Is Poised to Surge: https://www.morganstanley.com/ideas/carbon-offset-market-growth
4. Nearly All Companies Will Miss Net Zero Goals Without At Least Doubling Rate of Carbon Emissions Reductions by 2030, Accenture Report Finds; https://newsroom.accenture.com/subjects/research-surveys/nearly-all-companies-will-miss-net-zero-goals-without-at-least-doubling-rate-of-carbon-emissions-reductions-by-2030-accenture-report-finds.htm
5. Putting Carbon Markets To Work On The Path To Net Zero. ; https://www.mckinsey.com/capabilities/sustainability/our-insights/putting-carbon-markets-to-work-on-the-path-to-net-zero
6. Above and Beyond Carbon Offsetting; https://carbonmarketwatch.org/wp-content/uploads/2020/12/AboveAndBeyondCarbonOffsetting.pdf
7. London School of Economics; https://blogs.lse.ac.uk/internationaldevelopment/2023/01/26/the-verra-scandal-explained-why-avoided-deforestation-credits-are-hazardous/
8. Why Big Tech Is Pouring Money Into Carbon Removal; https://cnb.cx/3xUMXWC
9. The Taskforce on Scaling Voluntary Carbon Markets; https://www.iif.com/tsvcm