● Advanced Technology

Revolutionising the Australian Carbon Market

8 minutes 10 months ago

What is BetaCarbon and its purpose?

BetaCarbon is a company that was established in May 2021 in Sydney, Australia, with the aim of democratising the Australian Carbon market. The company seeks to increase the price of carbon in Australia by addressing the barriers to entry and scaling up the asset class effectively. By boosting the demand for Australian Carbon Credit Units (ACCU's), BetaCarbon aims to create a ripple effect of increased CO2 prices in Australia, which will drive the need for new supply.

What is a carbon credit?

ACCU’s are created in Australia under the emission reduction fund and can be created from around 27 methodologies. Most of the supply has traditionally been delivered under Landfill Gas, Avoided Deforestation, Human Induced Regeneration, and traditional cold burning and fire practitioners who conduct early dry season preventative burns. Some of the most sought-after credits with varying SDG and co-benefits can command meaningful premiums to the published generic ACCU price.

Who is behind BetaCarbon?

BetaCarbon was founded by a group of individuals who had collectively managed large trading books in banks, treasury professionals, and entrepreneurs who have founded and exited technology companies. The diverse team includes environmental scientists, engineers, product and data scientists from Mexico, China, Italy, South Africa, Brazil, the USA and of course Australia.

How does BetaCarbon work?

One of the key differentiators of BetaCarbon is the ability to expand its token supply through the purchase of ACCU's. Unlike many other cryptocurrencies that can mint an infinite number of tokens without any backing, BetaCarbon's BCAU token, which operates on the layer 1, ERC-20 protocol, requires the purchase of an ACCU to notionally back each token. Each BCAU token notionally represents 1 KG of ACCU. For example, if BetaCarbon purchases 1000 Tonnes of ACCU, it can mint 1 million BCAU tokens.

Why is BetaCarbon different to other carbon token projects

BetaCarbon stands out from other carbon token projects due to its direct involvement in the Australian Carbon Market, which is a hybrid compliance carbon market. Starting from July 1, 2023, Australia's largest 215 polluters are legally required to participate in this market. This legislated target is designed to bring Australia's nationally defined commitment of a 43% reduction of CO2 by 2030 against its 2005 baseline. In short this means large companies will be forced to purchase ACCU or reduce emissions to be compliant.

Unlike other carbon credit token markets that rely solely on voluntary participation, the Australian market's compulsory nature increases demand and price expectations.

Additionally, the creation of ACCU's in Australia follows rigorous methodologies, and the time required for supply creation is measured in years, leading to potential supply shortfalls as demand continues to grow.

What are the ECOnomics of BetaCarbon?

  1. Increased Demand for Carbon Credits: This increased demand creates a market signal that encourages the development and implementation of new carbon projects.
  2. Higher Carbon Prices: The purchase of BCAU tokens contributes to an increase in the price of carbon credits. When the price of carbon credits rises, it becomes more expensive for emitters to release CO2 into the atmosphere. This higher cost incentivizes companies to transition to cleaner and more sustainable practices.
  3. Limited downside and uncapped upside: Due to its unique backing with live credits, BCAU aims to have limited downside risk, primarily linked to the pricing of ACCU's. On the other hand, the upside potential of an ERC-20 token remains uncapped.

Can BetaCarbon really make a meaningful difference to climate change and climate repair?

Yes it can. With just 5% of the Australian population purchasing their equivalent carbon footprint in BCAU or 15,000 BCAU per year, we could remove over 50 % of the supply from the general market. This would catalyse a significant era of carbon pricing, accelerating the country's transition to a cleaner future and compelling polluters to decarbonize on a large scale.

Can BetaCarbon Trade materially higher than the price of the underlying carbon?

BetaCarbon presents a unique and promising approach to revolutionize the Australian Carbon market. By increasing demand, raising carbon prices, and offering a token-backed by live credits, BetaCarbon has a great potential to drive substantial change in climate repair and carbon reduction efforts.

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