Nasdaq has introduced an innovative technology with the objective of digitalizing the issuance, settlement, and custody of carbon credits, creating a secure and efficient platform for market infrastructures, registry platforms, and other service providers globally.
Unlike traditional markets, the carbon credit industry has been characterized by bilateral trading and a heavy reliance on manual interaction, hindering scalability and standardization. This has resulted in challenges in attracting substantial capital flows and led to fragmented technology choices, a lack of system flexibility, standardization, and connectivity.
Through the use of smart contract technology and deployment via private centralized databases or private blockchain technology, Nasdaq’s pioneering service will assist market operators and registries in creating standardized digital credits and distributing them throughout the transaction lifecycle with full auditability. The company has also developed a carbon taxonomy framework and a comprehensive set of APIs to support the market’s evolution and enable seamless interaction across the industry.
According to Roland Chai, Executive Vice President and Head of Marketplace Technology at Nasdaq, the carbon credit market’s lack of system flexibility and standardization has hindered its growth and development as an asset class. The implementation of this institutional-grade technology is anticipated to enhance liquidity across carbon marketplaces and facilitate greater interoperability between registries in the future.
Furthermore, this technology will improve efficiency and transparency throughout the trade lifecycle and provide a complete audit trail of credit ownership and retirement, revolutionizing current multiparty workflows and industries where manual processes prevail.
In efforts to strengthen its position in the carbon credit market, Nasdaq has announced a technology partnership with Puro.earth, a prominent standards and registry platform for engineered carbon removal, to register CO2 Removal Certificates (CORCs). This collaboration aims to offer full traceability and transparency for carbon removal projects, addressing the challenges of manual interaction and burdensome data collection tools in the voluntary carbon removal market.
The carbon credits issued by Puro.earth align with high-quality carbon removal methodologies as defined by the Intergovernmental Panel on Climate Change, ensuring the credibility and trustworthiness of the carbon crediting infrastructure, making them accessible to carbon marketplaces, exchanges, and a wide range of market participants.
Nasdaq’s groundbreaking technology comes at a time when the demand for international carbon credits among companies is increasing, with the carbon credit market projected to exceed $50 billion in value by 2030. This technological advancement has the potential to transform the carbon credit industry significantly, representing a significant step towards developing standardized, trusted ecosystems capable of attracting high-quality liquidity and accelerating the growth of carbon markets.
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