Australia doesn’t have an economy-wide carbon trading scheme, but heavy emitters must buy carbon offsets (ACCUs) if they pollute above a certain threshold.

This modest legal requirement has led to the funding of a range of carbon reduction projects, as was intended, but it’s also planted the seed for a carbon trading market in Australia.

Currently, there are barriers to buying ACCUs (Australian Carbon Credit Units) from their source (the Clean Energy Regulator). The market is accessible only to a small group of industry players.

But startups like BetaCarbon are creating tokens on the blockchain to crack open this market, and make the asset accessible to everyone.

Guy Dickinson founded BetaCarbon in 2021 after spending more than a decade at HSBC. He recognised the huge opportunity in making carbon credits more accessible, while recognising the emerging power of crypto as a platform to facilitate it.

“The core mission is to sequester more carbon, but we want to do it using a market mechanism. We want to make carbon credits an asset class that is tradeable, but also, we want to take it further to become part of the regular digital commerce system.” Guy says.

The model is simple, and won’t require any in-depth knowledge of crypto markets or blockchains to get involved. At its core, BetaCarbon buys ACCU’s from the market, these credits are administered by the clean energy regulator, and then offers a token to retail investors that offers a notional backing of the carbon credits.

ACCU’s represent 1,000kg of C02 emissions reductions, and 1 BetaCarbon token represents 1kg of carbon. This fractionalisation is a further benefit to investors who only want access to a smaller portion.

While an investor won’t have direct ownership or legal rights over the asset (the ACCU) BetaCarbon is legally required to hold 1 ACCU for every 1,000 tokens they create.

“For token-holders, the downside is theoretically  limited to the prevailing carbon price, it will only fall as low as the price of the ACCU because we have the option to make markets. There’s  limited risk for us because we can then sell the corresponding ACCU into the official market” Guy explains.

In terms of retiring the carbon credits, it gets more complicated. There are ways that the BetaCarbon tokens can be retired, this will involve producing an additional token that can be used to retire the asset. But, if retail offsetting is your goal, this model may not be the most efficient.

BetaCarbon is focused on making the Aussie carbon market accessible to more people. They want to drive a price signal for credits which will hopefully increase the price, which will mean more carbon reduction and carbon drawdown projects funded.

“We want to give people the power to invest in a system that both puts a cost on emissions, while also incentivising  carbon drawdown from funding more projects.” Guy says.

The team recently closed an oversubscribed capital raising, they pulled in $3 million of funding for operational and growth expenses. They sold $2.5 million of tokens in a pre-launch, which takes some 52 million kg of C02 allowances out of the market.

Leave a comment

Your email address will not be published. Required fields are marked *