making sure that there was choice available in the marketplace. Putting out different choices for a similar product—whether it’s a different location, or a slightly different type of project, be it solar, wind, or biomass—really helps them validate their decisions. Then we thought about value—having transparency on the price.
By having all of those in one place, we’re really helping people come together. Word is getting out, and more and more transactions are taking place. One example that I thought was pretty phenomenal was that an Australian company, while we were all sleeping, put a bid out and found a company that was selling something in India. So people are finding each other and connecting.
X: Why aren’t you running the World Green Exchange as an online auction, the way the other parts of World Energy’s business work?
KI: A year ago, we were very much an auction-focused company, and a lot of those values remain. What we’re doing now is saying, there are a lot of commodities out there that make sense for auctions, and others that might not. Compliance RECs (Renewable Energy Credits) might make sense to run auctions for, because compliance buyers have to have them, and they’re all aware of the seller, and the only thing left to negotiate is price. But voluntary carbon credits or early stage international certified emissions reductions, or CERs, are not really a good auctionable item, because the price isn’t the only thing in the decision-making process. You have to consider the credit terms and the liability terms of the contract. So we were thinking about how we can make this process easier and more efficient, by getting rid of paper RFPs [requests for proposals] and having a 24/7 exchange where buyers can find sellers.
X: How much of the market for carbon credits is generated by what you called the compliance buyers—companies or organizations that have to buy the credits to comply with some state or federal rule, such as the Renewable Portfolio Standards in many states—and how much comes from the voluntary buyers?
KI: It’s pretty much a 35/65 split, with the 65 percent being compliance-obligated. But the compliance trades are a much larger volume, and the voluntary trades are much smaller. For obvious reasons, those coming on a voluntary basis are where [the Green Exchange] will help the most. The documentation we provide helps ease them into buying something that’s real. The compliance side usually knows what they’re looking for—they say “give me this, this, and this.”
X: How do you verify that the carbon credits being offered on the World Green Exchange are truly additional?
KI: There are third-party organizations like The Gold Standard, Social Carbon, the Voluntary Carbon Standard, and the California Climate Action Registry that put out methodologies for saying that a project qualifies. These are usually written standards, and the organizations hire verifiers who go out to these projects and make sure the projects meet the requirements. If [a buyer on the Green Exchange] wants to find out the full story, they can open the verification report. Then, along with that, you have the registries, the people who provide the tracking system. Just like every U.S. dollar has a serial number, any real carbon credit should have a serial number so that it’s not double-counted or double-sold, or any of the things that bring bad press.
We are trying to bring confidence to the market so that when somebody buys something, they won’t end up on the front page of the newspaper as buying something that wasn’t additional, that wasn’t real. We’re saying, you should stop being fearful of spending money on a voluntary basis and getting hit for it in the press, and here’s how you do it: you have
