CAD Trust tool incorporates leading carbon market standards, aims to support Article 6 despite COP28 setback.
CAD Trust said aggregation and harmonisation of “fragmented” datasets from diverse private and public carbon market registries on its digital platform would “boost market transparency”, an aspect of carbon markets which has historically been criticised.
It also underscored the increased “ease” with which users are able to access, scrutinise, compare, and utilise “extensive” data on carbon credits.
The dashboard has incorporated the datasets of four carbon market standards – Verra, Global Carbon Council, EcoRegistry, BioCarbon Registry – as well as the Clean Development Mechanism (CDM) data from the United Nations Framework Convention on Climate Change (UNFCCC).
“The standards and registries that have so far connected with CAD Trust are demonstrating leadership and a shared commitment to enhancing transparency in carbon markets,” said Dinesh Babu, Executive Director of the Climate Action Data Trust.
The tool currently contains 85 carbon credit data sets, which are made available to all market players under a shared taxonomy. CAD Trust described adding the datasets as a “critical step in boosting the transparency and integrity of carbon markets”.
The CAD Trust was created last year by the World Bank, The International Emissions Trading Association (IETA), and the government of Singapore. It is a decentralised metadata platform that links, aggregates and harmonises all major carbon registry data to enhance transparent accounting in line with Article 6 of the Paris Agreement.
As well as adding the four datasets to its tool, the initiative recently incorporated the national registry of Bhutan. CAD Trust’s Babu told ESG Investor the trust hopes to add the national databases of other countries, adding that a core focus will be working with countries to use the platform to templatise reporting formats for carbon markets.
The initiative’s common data model was agreed and consulted upon by several governments -including Chile, Japan, Rwanda, Singapore, Spain, and the UK – international organisations, and market participants.
The platform also offers access to project developer information and improves price discovery for carbon credits, particularly for tracking the Article 6 status of credits once authorised by the host country.
CAD Trust intends to review feedback on the dashboard from exchanges and other data users in terms of further improvements to the tool, how its features could be enhanced and whether the data sets should be further expanded.
The initiative will also create use cases for the dashboard to showcase its positive impact following the initial plans for its use by the CAD Trust and illustrating that is now happening.
“More access to the data from different users will give us more opportunity to further enhance its features and provide the platform with such an accessibility that data really delivers in terms of the transparency and integrity of the carbon market as it expands,” Babu said.
Incorporating Article 6
IETA said the CAD Trust can bolster Article 6 by promoting compatible national registry systems. Parties can report to the initiative using a unified data standard, which the association suggested will ensure harmony between national and independent registries and support the Paris Agreement’s international reporting.
Babu said that for Article 6, countries will work with CAD Trust on integration of data before standardising UNFCCC reporting.
Article 6 of the Paris Agreement enables countries to cooperate when implementing their nationally determined contribution, including through the development and mobilisation of carbon markets.
At Dubai’s COP28, parties have failed to reach a consensus on texts relating to Articles 6.2 and 6.4 of the Paris Agreement, causing further delays to progress on international carbon markets regulation.
Babu said that for Article 6.2 it’s “natural it is taking time” and doesn’t think it will “slow down the operationalisation of 6.2”. He added it is ultimately a “positive signal to the private sector for long-term investment”.
At COP28, the World Bank unveiled its ‘Engagement Roadmap for Carbon Markets’, which aims to support countries to generate a robust supply of high integrity carbon credits. It also has a Carbon Assets Tracking System (CATS), an Emission Reduction Transaction Registry that supports the issuance and transactions of units generated under the World Bank Programs.
Babu said that CATS is considered as another registry by the initiative and has the goal of connecting it to its data in the Q1 2024.