Rubicon Carbon, a carbon credit provider, has introduced a risk adjustment framework for new and existing carbon credits. The new system aims to address issues in the carbon credit market and improve confidence in voluntary carbon markets. According to a whitepaper outlining the framework, all carbon credits carry some level of risk, which can erode trust among buyers. Risks can be external, such as those imposed from outside the carbon project, or internal, such as flexibility in project methodologies or uncertainty in measuring project impact. The authors of the whitepaper propose a risk-adjusted approach, which involves retiring additional credits from the market to account for the gap between registered credits and the actual environmental benefits of a project. This is done by using a risk adjustment buffer pool. The risk adjustments are calculated on a project-by-project basis, but implemented at the portfolio level. The authors argue that this approach improves the quality of the existing credit supply and ensures the market is future-proofed. Rubicon Carbon aims to use its risk adjustment framework to assess the gap between the number of registered carbon credits and the actual tonnes of carbon credits that have been invested in by the company and its buyers. By retiring more credits than used as offsets, they seek to ensure that each credit represents one tonne of carbon kept out of or removed from the atmosphere. This framework is intended to drive confidence in the market and provide a more accurate estimation of a project’s environmental benefits.
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