How AirCarbon Exchange Simply And Effectively Streamlines Carbon Trading AirCarbon Exchange brings a traditional commodities-based architecture to the voluntary carbon market underpinned by a custom built and proprietary digital architecture.
By Ashok Raman
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AirCarbon Exchange (ACX) is the global digital exchange powering the future of carbon credit markets. The advanced and highly efficient platform completely transforms the entire lifecycle of carbon credit ownership for all participants. A new level of transparency is realized through consistent pricing of credit categories underpinned by the revolutionary use of standardized contracts and blockchain-based capabilities to drive consistency and visibility of all assets.
AirCarbon Exchange (ACX) was founded in 2019, when Thomas McMahon, co-founder and CEO, and William A. Pazos, co-founder and Managing Director were approached by Enterprise Singapore, a government agency focused on innovation and business development to discuss the possibility of launching a digital carbon exchange in Singapore.
While the original plan was to target the growing carbon offset reduction scheme for international aviation (CORSIA) segment of the voluntary carbon market, the team however soon realized that there was a much larger opportunity beyond carbon offsets for international aviation and quickly expanded their scope. The broader voluntary carbon market faced many of the issues the team had identified facing the CORSIA market. Firstly, financial intermediaries dominate carbon credit transactions, forcing sellers and buyers to incur large transaction fees often between to 20-30%. Secondly, many carbon credit marketplaces rely on antiquated technology, often providing simple bulletin boards to market carbon credit projects. It is an inefficient system requiring carbon credit sellers and buyers to navigate a multitude of marketing and administrative tasks to post, market, and sell projects.
Image courtesy AirCarbon Exchange/Lucidity Insights.
ACX brings a traditional commodities-based architecture to the voluntary carbon market underpinned by a custom built and proprietary digital architecture. By taking other commodities as inspiration, the company provides the market with pricing benchmarks based on ACX's standardized carbon contracts. The infrastructure underpinning its platform leverages distributed ledger technology (DLT), which is the perfect match for carbon credits, which themselves are serial numbers recorded on a ledger.
DLT also provides benefits to trading such as instant settlement of transactions. The main advantages include low fees, efficient trading, settlement risk mitigation, and transparent pricing. This has resulted in ACX onboarding over 160 clients across 32 different countries, with a good mix of project developers and institutional clients, which include trading houses, hedge funds, and family offices.
ACX was recognized as the Best Carbon Exchange globally in Environmental Finance's prestigious Voluntary Carbon Market Rankings, the largest and most closely watched survey of the world's voluntary carbon market, for two consecutive years in 2021 and 2022. While ACX does not currently plan to be a retail facing exchange, it is expanding its presence beyond Singapore and Abu Dhabi, and setting up offices with partners in Brazil, Canada, and other countries. In the meantime, the company is also looking to raise US$50 million in an upcoming Series B round.
This article was originally published on Lucidity Insights, and it has been reposted on Entrepreneur Middle East based on a mutual agreement between the websites.
