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The Role of Carbon Credits, Blockchain and the Voluntary Carbon Market

4th November 2021

Sabien Technology Group plc

(“Sabien” or the “Company”)

The Role of Carbon Credits, Blockchain and the Voluntary Carbon Market

Sabien Technology Group, the Company focused on a Green Aggregation Strategy, publishes research today that examines the role of new and developing markets for emissions trading. The Company is hosting a virtual debate on the Green Economy on Thursday, 11 November 2021. The research’s scope and conclusions will be a component part of this debate.

This report can be downloaded on the Company’s website.

Authored by graduate students from Warwick, Shanghai Jiao Tong and Toronto Universities, the research compares the mechanics of the regulatory and voluntary carbon markets (respectively RCM and VCM), in the context of Emission Trading Schemes (ETS). Specifically, it assesses the path which carbon offset markets could take as the acceptance of blockchain technology improves.

The report concludes that the VCM could grow from a base of US$282m in 2019 to US$50bn by 2030 (source: Mckinsey Consulting). In large part, this growth is based on the rapid acceleration of net-zero commitments from corporations and the concomitant ambitions of Governmental agencies such as the UK Taskforce on Scaling Voluntary Carbon Markets, headed by Mark Carney, recently Governor of the Bank of England and a key contributor to COP26.

Maturing VCMs must address the issues of quality assurance, price volatility, and market structures. At present, the principle VCMs are characterised by a supply and demand imbalance which, the report concludes, reflects a lack of confidence in the status and fungibility of the associated credits.

The report suggests that the UK’s ETS, following the departure from the EU, offers significant benefits to organisations operating in transport and HVAC sectors. This is due to the UK’s leading aim to reduce Greenhouse Gas (GHG) emissions by 78% on 1990 levels by 2035. However, while the UK has made progress in creating a robust market, including the introduction of a Cost Containment Mechanism (CCM), the report highlights that carbon credits have not yet attained a status sufficient to attract regular and considerable trading flows.

Accordingly, the report recommends that carbon credits are contained within a blockchain environment. Such a move would:

  • Improve the security for carbon credits through the encrypted distributed ledger system:
  • Provide an audit trail relevant to the creation of carbon credits and their subsequent trade:
  • Support a “project-specific” approach to the creation of carbon credits and their subsequent trade.

Sabien is considering the evidence and conclusions of the report actively. The Company is committed to a shareholder value creation through the economic opportunities provided by the move to net-zero. It will comment further on its deliberations at the forthcoming GAS Event.

Commenting on the Report, Richard Parris, Executive Chairman, said:

“For too long the discussion of the economics of sustainability has been hampered by the lack of mature voluntary markets. It is clear now that the market creation is accelerating consistent with the move to net-zero. Our report highlights that the sustained development of this voluntary carbon market is not only possible but to be encouraged, but it must be capable of transparency, security, and trade. The introduction of carbon trading to a blockchain ecosystem may provide these tenets and is entirely consistent with my personal expertise in the cybersecurity industry. Furthermore, it is supported by Sabien’s collaborative approach; combining technologies with needs to produce benefit. We look forward to debating these points on 11 November.”

Further Information:

Sabien Technology Group plc Richard Parris, Executive Chairman   +44 20 7993 3700  
Allenby Capital Limited (Nominated Adviser) John Depasquale / Nick Harriss   +44 203 328 5656
Peterhouse Capital Limited (Broker) Duncan Vasey / Lucy Williams +44 207 469 0930

A copy of this announcement will be available from the Company’s website at www.sabien.com

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