Carbon credits get a bond-style rating proposal from activist investor


Kimmeridge Energy‘s activist investor, Ben Dell, has put forward a proposal to rate carbon credits in a manner similar to bonds.

The main drive behind this idea is to instil confidence in buyers that their investments genuinely impact the reduction of global emissions. The carbon credit sector, currently unregulated, is a flourishing $2bn market. Companies utilise these credits to counterbalance their environmental footprint. These credits emerge from various eco-conscious initiatives, from tree-planting schemes to the capture of industrial gases.

Kimmeridge Energy, having invested in Civitas Resources (CIVI.N) – celebrated as Colorado’s inaugural carbon-neutral energy producer – has also placed its bets on Chestnut Carbon, a dedicated producer of offsets.

The primary goal is to tackle rising emissions, with scientists advocating for the extraction of CO2 from the atmosphere as a pivotal step towards achieving global climate targets. However, there’s a rising wave of scepticism about these voluntary carbon markets, with critics challenging their transparency and genuine environmental benefits.

In a bid to address these concerns, Kimmeridge’s report recommends implementing a universal scale to evaluate all project types. Drawing parallels between the voluntary carbon markets and the bond market, it lays out a chain comprising four main players: regulator, auditor, rating agency, and the buyer pool.

In an interesting development, an independent governance body named the Integrity Council for the Voluntary Carbon Market (ICVCM) shared its set of criteria for establishing new benchmarks in the carbon offsets market just a month ago.

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