Solid World unveils blue carbon forward liquidity pool

Quantum Commodity Intelligence – Estonian startup Solid World has launched its first 'forward carbon liquidity pool' to help finance mangrove projects around the world, it announced on Thursday.

The company was set up last year and boasts an array of partnerships with voluntary carbon market players, including Vlinder, Allcot, MangroveDAO and SCB, as well as $2.7 million in funding.

The new platform enables market participants to trade in forward carbon credits, a market that suffers from poor price transparency and a lack of liquidity.

All carbon credits available on the platform will use a common framework to rate non-delivery risks for projects at the investment stage, described as the Carbon Risk Identification and Scoring Principles (Crisp) tool.

The framework is also available as a "public good" under a creative commons license, said the company earlier this month.

"It can take years to get revenue for credits because these credits are not generated until long after the climate-positive activity has taken place," read a company white paper published last year.

"Currently, there is no price and volume transparency in general in the pre-purchasing market, so projects do not know what they are worth. This is a bad situation to negotiate from. We want the terms to be clear," it said.

The company's first pool includes credits from six mangrove restoration projects in Senegal, Myanmar, Kenya and Indonesia that are in the process of registering with US-based carbon standard Verra.

All of them have completed at least one year of planting, have needed agreements in place and have been reviewed by a committee, said Solid World.

Climate warehouse

Emissions vintages from 2022 to 2027 are currently available to trade, while certain projects only start in 2024 or 2025, data from the platform shows.

Solid World will function as "a digital climate warehouse, not a marketplace" and intends to work with existing brokers and traders to help foster buy and sell activity rather than actively compete with them.

"With transparent pricing and terms, (the platform) supports streaming credits to meet client demands and seizing market price arbitrage opportunities... The result is a win-win solution for carbon projects and distributors, ensuring better access to capital, attractive prices, real-time liquidity, and deep documentation," it said.

"It opens up trading and hedging strategies that are possible in the traditional stock market, but that have been so far unreachable in the carbon markets," the company added.

To participate, investors – called liquidity providers – will need to convert some of their money to a common currency called CRISP-M, then deposit it into a pool with USDC, a stablecoin, before they can start contributing.

Counterparties can then use that to trade against, thus facilitating the financing of projects in the process.

Buyers can also directly access forward credits by exchanging CRISP-M for mangrove project forward credits, said Solid World.

Over time, Solid World plans to create new pools for reforestation, Gold Standard cookstoves, peatland restoration and biochar projects, it added.