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The Promise of Sound Carbon: Why Verification and Accounting Matter in Carbon Financing

The Promise of Sound Carbon: Why Verification and Accounting Matter in Carbon Financing

March 16, 2023

“A carbon credit is only as good as the data that is representing it,” said Dariush Ruch-Kamgar, an investor at Binance US, opening a conversation about the importance of verification and accounting in the voluntary carbon market. 

The panel, put on at Flowcarbon’s 2023 ETHDenver Climate Summit and moderated by Tyler Crabtree of Carbon Path, discussed the issues surrounding the quality of data for carbon projects as well as some of the solutions that are currently being worked on in the space. 

When talking about Digital Measurement, Reporting and Verification (DMRV), most people tend to focus on the final product, the carbon credit itself, and the buying side. However, as Maex Ament, co-founder of Centrifuge and Crane Earth pointed out, 

“Data is even more necessary and valuable in the beginning of a project, when there is no collateral, and you need data to make financing decisions.” 

As we look ahead to the future of the voluntary carbon markets, we need more capital flowing into the ecosystem to support the growth and financing of projects. Data will become a key competent in underwriting decisions, and hence crucial for the industry to scale over time. 

As the industry scales, data will become an integral part of every step of the value chain, from feasibility, to financing, to project development, issuance, and monitoring.

“The promise of sound carbon is also the promise of a better price for carbon. Because today in this market, the price for carbon is very wide, from low values to high valued, “ said Fred Fournier, co-founder and CEO of Open Forest Protocol. “If we can work towards more precise accounting for carbon, with a data-backed carbon credit, we will have a better price. A better price means a better chance of addressing the climate issue.” 

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