The Addressable Market for PERL.eco Carbon Exchange
Trove Research, a leading data and analysis firm focused on tracking and assessing corporate climate commitments and all aspects of the voluntary carbon market has, this week, published its in-depth report: THE ROLE OF “REDUCTION” AND “REMOVAL” PROJECTS IN THE VOLUNTARY CARBON MARKET — AN ECONOMIC ANALYSIS.
Citing the Intergovernmental Panel on Climate Change (IPCC) call for rapid and deep emission reductions and the removal of CO2 from the atmosphere to meet the 1.5°C target for the year 2100 with limited overshoot, the analysis focuses on the corporate sector, which accounts for nearly three-quarters of global emissions, and has a significant role to play in reducing emissions and financing emission reductions. The report covers a number of issues relevant to PERL.eco and our planned launch of PERL.eco Carbon Exchange (PCX) with an economic analysis of the voluntary carbon market, including the costs and revenues of different project types and the impact of non-carbon revenues on project economics, and future supply projections.
The report is important because it is one of the first analyses of its type to develop a model approach for estimating the costs of different types of carbon removal and reduction projects. While a lot of analysis has focused on the growth of carbon markets, there has been little information available on the levels of investment that are required to achieve the necessary reductions.
As we have covered in a previous article, research from Morgan Stanley estimates that we will need at least one gigaton of carbon removals and reductions by 2030. It should be noted that Morgan Stanley’s estimate is on the low side compared to other studies. Even still 1,000,000,000 carbon credits each year starting in 2030 is a lot to deliver, especially when you consider since its creation, the voluntary carbon market has only issued 1.7 billion carbon credits in total. This means, based on current levels of issuance, we need to increase the number of credits being issued each year by at least a factor of three. To achieve these targets, it means many more carbon avoidance and removals projects coming on stream and these projects will all require finance before they start to issue credits.
Based on Trove Research’s findings, we can now look in more detail at the total addressable market for PERL.eco Carbon Exchange (PCX) in terms of likely demand from carbon project developers listing, PERL.eco Future Carbon (PFCs).
Trove’s findings place the development costs of nature-based carbon credits at around US$11-US$12 per tCO2e (or per credit) and with an additional 600,000,000 credits to be created by 2030 annually, that points to financing requirements running to several billions of dollars. So large is the funding requirement, that if PCX were able to capture ten percent of the potential market, it will quickly rise to being a billion-dollar trading platform.
The fees PCX earns from its listings and trading of PFCs provide fiat revenues for PERL.eco. These fiat revenues can be used to create rewards for liquidity pools, support airdrops, or fund buy-back and burn for PERL tokens. We are committed to ensuring that the decision-making over revenue deployment will sit with the community of PERL holders.
It is important to understand the scope of the total addressable market for PCX and how the scale of this market opportunity brings benefits to PERL. PCX is scheduled to launch before COP28 which will be held in the UAE. We will be leveraging the build-up to this important climate summit to market the exchange to investors and carbon project developers alike.
The record temperatures are being recorded every year and with 2023/2024 predicted to be the start of an El Niño period, those temperature rises are likely to increase future, bringing devastating freak weather consequences to the world. Climate change is not a theory but a reality and what happens between now and 2030 will define the rest of this century.
PERL.eco is proud to be playing our small part in bringing solutions in the fight against climate change. We need to make 2023 an impactful year.
