Over the last 44 years, my work has evolved around the commodities industry and, primarily, within 3 distinct disciplines: trading, complex derivatives and, over the last almost 2 decades, technology aimed at solutions for the climate emergency. The result of these almost four and a half decades has allowed me to have a deep understanding of how a commodity market actually functions and how that functionality brings value to the commodities it prices.

I have reached an important conclusion in the last 12 months -  the carbon dioxide industry, as a whole, is in dire need of a global and transparent price.

To enable the CO2 carbon credit market to function in a manner that attracts capital to the CleanTech sector globally, the industry, governments, financiers, regulators and other participants, need this global, standardised and verifiably trustworthy price for CO2 emissions.

Carbon permits/credits/offsets are central to the mechanisms that currently price these emissions, however, for those instruments to flourish and act as an efficient conduit for capital, we must treat carbon dioxide for what it is – a commodity, and allow it to be influenced by supply and demand. ‘Supply’ being the horrendous billions and billions of tons of CO2 emissions being thrown into the atmosphere each year and ‘Demand’ reflected in the need to ‘cease & desist’ such activities. The Supply comes from industry and the demand comes from the Consumer or, to be clear, governments acting on behalf of Consumers. We need to remove the governments from the pricing of CO2, (but not the regulating, compliance and legal functions) and give the pricing power directly to the Consumers, where it belongs.

You will probably be familiar with the method by which these carbon credits, etc. are priced as of now. Unfortunately, this method involves little coordination between governments (other than, arguably, within the EU) and, even where governments are aligned, there can be alarming disparity between those countries as to how these regional credits are priced and perhaps more importantly, what type of mitigation of a quantifiable CO2 emission is permitted.

The unintended consequence of this disparate pricing is that the vast amounts of capital being redirected from fossil fuel investments into a "CO2 negative" process has failed miserably. We are approaching what can only be described as an uncontrollable decline which might (some say) already be irreversible.

The fossil fuel industry (plus other industries such as cement manufacturing) and associated financiers, consultants, governmental and non-governmental bodies (along with regulatory, legal and compliance functions) all have well trodden pricing models allowing capital to be directed towards companies and projects in the relevant sectors. The enormous problem the world faces now is that no such pricing mechanism exists on a standardised, accountable and trustworthy platform in the global CleanTech sector. Whilst we have seen attempts to force pricing of CleanTech opportunities into the traditional fossil fuel models, these have seen limited success. Additionally, the technological solutions to the climate emergency are relatively sparse and come nowhere close to ‘moving the needle’ in any direction but up.

Having been involved in the commodity industry for more than 4 decades and, specifically, in CleanTech for almost half that time, I have seen no technology or process emerge that has the ability to alter our course in any material way. The juggernaut of endless emissions continues unabated in this downward trajectory. However, the alarming climate emergency has alerted scientists and governments to the dire need for a global CO2 emissions price.

The purpose of a global price is not simply to set a price for the commodity itself, but perhaps more importantly, to allow the nucleus of a financial model to be created. A financial model that can take various indices for carbon dioxide in many forms and locations (such as the manner in which global commodity prices are already created) and then use those indices to properly price those emissions and, from that point, allocate risk adjusted capital to those projects in a manner that allows, even the poorest credits, to receive much needed funding.

It is my firm belief that a new and independent CO2 commodity exchange can be created in North America whereby a combination of the data from the ‘physical’ (supply/demand) inputs can be captured and stored in an Immutable Ledger on the Blockchain such that all of the original data from the associated Permits, Credits & Offsets are securely stored – from the initial hydrocarbons responsible for the emissions right down to the consumer transaction that, ultimately, rewards the owner of such credits for either not emitting, repurposing, capturing and indefinitely storing those CO2 molecules. We are calling this business the North American Global Emissions Exchange or “NAGEX”.

NAGEX will become a globally standardised and regulated exchange platform to price CO2 emissions in the form of digitized carbon credits which we will turn into a Carbon Warrant Passport or “CWP”. The twin advantage of this will be a validation of data that cannot be altered, along with the certainty that none of these CWPs can be monetized more than once.

With this emerging transparency comes security in pricing and, with that, we allow the major Over The Counter “OTC” participants (i.e, the international banks, pension funds and governmental funding) to direct the billions of dollars of capital into CleanTech…… all that these OTC participants needed was a trustworthy index……which NAGEX will provide them with.

As I always say, Ever Onwards!

Brian de Clare