Financing a Net-Zero Future with Carbon Credit Streaming
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Financing a Net-Zero Future with Carbon Credit Streaming

The following content is sponsored by Carbon Streaming Corporation.

Financing a Net-Zero Future with Carbon Credit Streaming

The world is advancing towards a net-zero carbon future, but achieving it will require a larger role for carbon credits.

A carbon credit is a tradeable certificate that represents one metric ton of carbon dioxide (CO2) or the CO2 equivalent (CO2e) of another greenhouse gas (GHG) that is prevented from entering the atmosphere or is removed from the atmosphere. Organizations purchase and use these certificates to offset their emissions that are difficult to reduce or control.

This infographic sponsored by Carbon Streaming Corporation explains how the company is funding the fight against climate change by bringing the streaming model—traditionally used in mining and energy—to the growing market for carbon credits.

The Rising Need for Climate Action

Global GHG emissions have risen alongside the expansion of industries and economies.

Since the Industrial Revolution, atmospheric concentrations of CO2 have increased at a rate at least 10 times faster than at any other time during the last 800,000 years. Consequently, global surface temperatures have risen, bringing the world closer to the devastating effects of climate change.

According to the latest United Nations Emissions Gap Report, limiting global temperature rise to 1.5°C requires a 50% reduction in GHG emissions by 2030 relative to current levels. While attaining this goal seems difficult, carbon credits can help get us closer to it.

What are Carbon Credits, and How Can They Help?

Carbon credits are generated by projects that avoid, reduce, or remove CO2e from the atmosphere. These projects include, but are not limited to:

  • Reforestation and forest conservation
  • Renewable energy
  • Carbon capture and storage

For every metric ton of CO2e that a project avoids, reduces, or removes, it generates one carbon credit. Companies buy these carbon credits to offset emissions that are difficult to reduce or control, such as value chain emissions.

The number of companies with net-zero targets has jumped over 200% between 2019 and 2020, up from 500 to 1,565. Carbon credits can help address various gaps on a company’s path to decarbonize, including:

  • Technological Gaps: Companies are limited by current reduction and removal technologies that are available at scale.
  • Time Gaps: Companies will require time to implement plans to reduce their emissions.
  • Cost Gaps: Companies may have emissions that are too expensive to eliminate today.

The Growing Demand for Carbon Credits

As more and more companies turn to carbon credits, the market size of both compliance and voluntary carbon markets is growing.

Compliance markets are regulated by governments to cap emissions for certain industries. Voluntary carbon markets are where carbon credits can be purchased by those that voluntarily want to offset their emissions.

YearVoluntary markets transaction valueCompliance markets transaction value
2017$146M$47B
2018$296M$170B
2019$320M$216B
2020$473M$261B
2021*$748MN/A

*As of Aug. 31, 2021.

Voluntary markets are substantially smaller than compliance markets, with a notable growth runway. Transaction values in voluntary markets have grown five-fold since 2017, and are on track to surpass $1 billion in 2021.

However, the supply of carbon credits in the voluntary markets relies on carbon offset projects, which require funding to be developed. These funds can be difficult to obtain before buyers purchase the carbon credits generated by the project. Carbon Streaming is able to provide this capital with its unique streaming model, bridging the gap in funding until credits are available for sale.

How the Carbon Streaming Model Works

The Carbon Streaming model functions in two simple steps. It involves an upfront payment from Carbon Streaming to a project developer, who then provides a stream of high-quality carbon credits in the future.

  1. Upfront payment to project developer: Carbon Streaming makes an upfront payment for the right to purchase future carbon credits.
  2. Stream of carbon credits: Carbon Streaming makes ongoing delivery payments and receives a stream of carbon credits generated by the project.

Carbon Streaming’s ability to access capital markets to raise low-cost capital provides it with a competitive advantage. The Carbon Streaming model allows the alignment of the strategic interests of Carbon Streaming and the project developer with both of them receiving multiple benefits.

Carbon Streaming acts as both:

  • A long-term partner with project developers
  • A trusted partner for buyers of high-quality carbon credits

Carbon Streaming provides impact investors with exposure to rising carbon prices while also financing projects that help achieve decarbonization and sustainability goals.

Carbon Streaming for a Cleaner Future

As the world shifts towards a net-zero carbon future, carbon credits will play a key role in helping countries and companies achieve their climate goals.

Carbon Streaming is funding the fight against climate change with its unique streaming model—an investment opportunity with several benefits for investors and the environment.

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