Visa makes a carbon market move (Axios – May 2022)

May 10, 2022 (Axios)

Visa completed a pilot carbon credits transaction with Carbonplace, the SWIFT-like service for the carbon market.

Why it matters: There is little room for a suite of infrastructure-software companies in a market with billions of dollars of risk-averse capital at stake. In short, just a few organizations will capture the growing market.

How it works: Carbonplace’s software allows buyers’ and sellers’ banks to communicate in compliance with know-your-customer (KYC) and anti-money laundering (AML) considerations.

The software itself is a private blockchain that retains the ledger of credit ownership and transfer. Though some public blockchain protocols are incredibly energy intensive due to the raw computing power associated with the proof-of-work mechanism, a private ledger without PoW requires less energy to run.

What’s happening: Visa purchased the Verra-certified credits from Sustainable Carbon, a carbon credit project developer.

In this case, Visa was able to offload the KYC process, which can be a comprehensive process in the nascent carbon market, to Carbonplace via its consortium of bank founding partners. National Australia Bank facilitated the transaction on Visa’s behalf, and Itaú Unibanco completed the sale on Sustainable Carbon’s behalf.

The pilot transaction’s goal was to ensure Carbonplace was set up for large financial and credit institutions that need to offset emissions in other areas, Robin Green, executive director of digital markets at CIBC, one of the banks that founded Carbonplace, tells Axios. What’s next: Carbonplace has completed several other credit transactions in the past year, and intends to be available publicly toward the end of 2022.

It will partner with banks, whose corporate clients then have access to its software, Green says.

Axios