Frequently Asked Questions
1. What is a carbon reward?
The carbon reward will be:
- an incentive for climate mitigation;
- a debt-free source of revenue;
- a type of conditional income;
- an investment-grade currency; and
- a financial asset.
The carbon reward will not be:
- a carbon offset credit;
- a government subsidy;
- a cryptocurrency; or
- legal tender.
2. What kinds of projects will be eligible to receive a carbon reward?
- Energy companies that reduce carbon emissions by supplying cleaner energy to the marketplace;
- Enterprises that reduce carbon emissions by changing their consumption patterns; and
- Projects that remove carbon directly from the ambient atmosphere using natural or engineered methods.
3. How will the reward be issued?
The assessment of carbon rewards will be similar to the assessment of carbon credits. Unlike carbon credits, the carbon rewards will be assessed under a common set of guidelines and policy rules that will stipulate the required levels of data accountability and transparency. The problem of additionality is a major issue for carbon offsets, but additionality does not apply to carbon rewards in the same way, because carbon rewards will not be used to offset carbon emissions.
The measurement, reporting and verification (MRV) for assessing carbon reward payments will be undertaken on a periodic basis in order to estimate the mass of carbon that has been mitigated for a 100-year duration. The time between each major MRV assessment may vary between 1 year minimum to 100 years maximum, depending on the perceived risk of carbon leakage, and the risk of defaulting by the project owner. Conditions for assessing the reward payments, charge-backs, and other transactions, will be detailed in service-level agreements and will be supported by policing. A novation clause will address the issue of long-term project maintenance. Other contractual provisions and digital technologies will be used to ensure that the total supply of the carbon currency will remain proportional to the global carbon stocktake for the policy.
The rewards that are given to low-carbon projects may be adjusted higher if the project provides social and ecological co-benefits, and the rewards may be weighted lower if the project creates harms for stakeholders. The assessment of the reward adjustments will be undertaken with the assistance of stakeholder groups, and these adjustments may be implemented on an annual basis, or over longer time intervals, depending on the risks to stakeholders.
4. How will the reward be funded?
5. Why are carbon rewards different to carbon offsets?
6. Why do we need the carbon reward?
In summary, the carbon reward is needed to:
- manage the systemic risks associated with the anthropogenic carbon balance;
- to improve social cooperation with a carrot and stick approach;
- to resolve the funding gap for carbon dioxide removal (CDR);
- to financially support the Paris Climate Agreement;
- to reduce conflict over cost sharing;
- to manage dirty economic growth;
- to resolve the inter-generational inequity problem; and
- to share information on climate mitigation technologies.