Informing the Design of a Digital Marketplace for Land-Sector Carbon

[摘要] The land sector has significant potential to contribute to Australia’s national greenhouse gas reduction targets, both through emissions abatement and carbon sequestration. The ongoing Emissions Reduction Fund (ERF) has invested heavily in land-based projects, particularly vegetation management for carbon sequestration. However, broader market participation is limited by the fragmented nature of non-ERF trading mechanisms and high transaction costs facing small project developers. This report considers how carbon markets may be designed to facilitate efficient and equitable participation by the land sector. Digital technologies are being applied within CSIRO’s Digiscape Future Science Platform to simplify the carbon project development process for landholders. This should serve to reduce transaction costs and facilitate wider landholder participation in carbon markets. There is an opportunity to complement these tools by designing market institutions, such as digital platforms and trading rules, to provide credible price signals and guide investment in the sector. Well-designed markets can elicit salient information from participants in an environment of trust. Decision-support and trading platforms should ensure that users retain control of their data and not seek to collect information for its own sake.A key challenge facing any nascent market is to provide sufficient thickness or scale, so that potential participants can find partners for mutually profitable trades. This is exacerbated by the fact that there are many different ways of generating carbon credits (e.g. soil carbon sequestration, savanna fire emissions abatement) which can also be associated with a range of co-benefits (e.g. social, cultural or biodiversity benefits). Recognising and valuing multiple attributes would greatly complicate the trading process, requiring participants to trade-off the various attributes against one another. The market can be streamlined by classifying carbon into different classes (e.g. soil carbon, reforestation, reforestation with biodiversity benefits, savanna burning with social benefits). This allows a variety of buyer preferences to be recognised and addressed while retaining a simple and intuitive market structure. Ultimately market participants should determine which classes are recognised. To avoid fragmentation, simultaneous auctions could be run across the various classes of carbon. Running auctions periodically (e.g. monthly) would increase thickness by aggregating supply and demand within each period. Bids could also be aggregated across different classes of carbon by allowing buyers to submit conditional bids (e.g. pay $x for class A or $y for class B; or buy carbon of any class at the lowest price available). A combinatorial market algorithm could be employed to find the optimal solution across the different classes, identifying the best matches between buyers and sellers, taking into account their expressed preferences and prices. Such a market platform would support both large and small, dominant and emerging, land sector approaches to greenhouse gas mitigation.

[发布机构] CSIRO

[学科分类] 地球科学(综合)