What’s in a Name… Or is it Smoke and Mirrors?

What’s in a Name… Or is it Smoke and Mirrors?

When we registered the Trademarks for Carbon Trade eXchange and CTX over a decade ago, we weren’t just the first and only. The innovation was unique; the technology was and is original. The concept we mirrored as much as possible the share market.

Where is it similar? Every project and its credits are unique and have different value propositions, but the fundamentals are Permanent & Additional emissions reductions, 3rd party Verified, validly issued into an independent trustworthy Registry who has confirmed the providence and the ownership. This allowed the creation of a fully electronic T+0 cleared and settled exchange – both a trading platform with OTC cleared behind it.

But the difference is vast – especially when it is not only unregulated (as it still should be) but also in early growth phase still. So, the technology is NOT exactly like a Stock Exchange, or a Commodities, Barter, Water or RECs exchange (all of which GEM has built and owns IP for).

Now suddenly everyone claims to have a ‘Carbon Exchange’, and organisations who have never traded a Voluntary carbon credit miraculously have technology to do so? Many own the trading platform, Registry, the credit standard and appoint the ‘verifiers’ having determined their ‘qualifications’, meaning checks and balances are out the window.

The term ‘Smoke and Mirrors’ means “the obscuring or embellishing of the truth of a situation with misleading or irrelevant information”.

One new VCM ‘exchange’ with a very large institutional owner is trading a hybrid credits ‘created unit’ that the contract says the following (downloaded and redacted from their public website):

Neither xxxx or any of their officers, members, employees or affiliates (as the case may be) make any representation, warranty, condition, undertaking or term, whether express, implied or statutory, regarding or relating to: (i) the xxxx Contracts or to the truth, accuracy, completeness, up-to-datedness or otherwise of any of the data, information, documentation, or materials taken into account (or not taken into account) by xxxx in making any decision, or taking any action (or refraining from taking any action), whether such data, information, documentation, or materials was prepared by or on behalf of the or was provided to xxxx (as the case may be) by one or more third parties; and (ii) the design, terms or functionality of the xxxx Contracts (or any of them) or their merchantability or fitness for any particular purpose. Neither xxxx, nor any of their respective officers, members, employees, affiliates or advisors (each, a Relevant Person) shall be liable to any such Exchange’s members or any other third party, whether in contract (including under any indemnity), in tort (including negligence), under a warranty (express or implied), under statute or otherwise, in respect of any loss or damage suffered by any such Exchange, member or other third party arising in respect of, or in connection with (including reliance on) any act or omission of any of the foregoing comprising or in respect of any amendment, decision, judgement, conclusion, opinion, exercise of discretion, announcement, notice or publication made, reached or formulated in the course of carrying out their obligations or duties hereunder or in the course of exercising any discretion hereunder, except where such loss or damage is directly caused by the Relevant Person’s willful misconduct or fraud.

Without prejudice to the foregoing, neither xxxx nor any of their respective officers, members, employees, affiliates or advisors shall be liable to any such Exchange’s members or any other third party under any circumstances arising from contract (including under any indemnity), in tort (including negligence), under any warranty (express or implied) under statute or otherwise in each case for any indirect, incidental, exemplary, special or consequential punitive losses or damages arising under this Protocol or xxxx Contracts amended (or not amended) pursuant to this Protocol, including loss of profits, regardless of whether such damages could have been foreseen or prevented. Neither xxxx makes any warranty that the members of any Exchange listing any xxxx Contract will be able to use such xxxx Contract (or any carbon credits incorporated within it) for offsetting purposes or to meet any compliance or regulatory requirement, statutory obligation or the requirements under any other applicable law, regulation or scheme. Such Exchange members are required to make, and rely upon, their own enquiries.

When this is a Hybrid Credit from a pool of credits where you do not know what you’ll get, how exactly can you check the validity or credibility of the end product (credits)? Smoke and Mirrors? We think so!

In case you were wondering, we won’t ever be trading this sort of credit on CTX, not any credit with 2 pages ‘verification documents’ from unqualified paid advisors like we have seen in certain so-called exchanges. The reason we list not only project type, credit standard, vintage, location and price, but links to the project information in the Registry in which the credits are issued and held is to ensure you can actually look at the details of Project Design Documents, monitoring and verification reports etc.

Saying you are concerned about ethics or credibility is just words – the truth is not always on the surface or in press releases – sometimes the devil is in the details. And just because they have big money or big backers doesn’t seem to stop what they are ‘selling’ being less than what you thought. So not only is it time to look more closely than ever but perhaps stick to our trusted brands that have stood the test of time.

Trade Volume Averages more than Double in 1 year

There is an old adage in business that ‘little fish are sweet’ and the last 12 months proves that, and the last 2 even more so. CTX has no maximum trade size, but minimum trade is only 100 tons – not 10,000 like some platforms. Why? So smaller/emerging sustainability consultants or brokers can access the wholesale market to build a business, targeting SMEs. However, we regularly see trades of over 50,000 – 500,000 credits, our largest trade (so far) being 1 million. The 52-week average has gone from around 4,000 per transaction to over 11,000 across all standards, projects and locations. In fact, that 52 average has gone up 10% in just 2 months. The new search linked index, and last 3 trades is a really cool way for sellers and buyers to price credits – and it’s worth noting that the unique CTX UN CERs now average over 27,000 per transaction. Projects like the regular cashflow of small trades – of course they all prefer big chunky deals – but anyone who really knows this market is aware it is very diverse. The biggest diversity and range are right here at CTX.

China – Do not Miss the Fabulous Quality Credits