CARBON

Carbon Credits

Project-level provenance retained on every unit.

What the instrument is

Carbon credits carry more provenance than any other environmental instrument. A unit is defined not only by its vintage and quantity but by the project that produced it, the methodology applied, the standard it was issued under, and the registry that holds it. Retirement is typically accompanied by a public claim, which makes the integrity of that provenance a reputational matter as much as a financial one.

Why it is hard to control

Provenance data usually lives in the purchase documentation — contracts, retirement certificates, registry screenshots — rather than in a system of record. When a claim is later questioned, or a portfolio needs to be assessed by project type or vintage, the organization must reassemble the evidence from files rather than query it.

Asset model

Attributes carried on every unit

AttributeWhy it matters

Project identifierThe specific project that produced the credit, retained on the unit rather than in a contract file.

Standard and methodologyThe issuing standard and the methodology applied, supporting portfolio analysis and claim substantiation.

VintageThe year the emission reduction or removal occurred.

Registry and serial referenceThe registry holding the unit and its serial identification, used as the reconciliation key.

Credit categoryReduction or removal, and the project type, supporting portfolio composition reporting.

Acquisition basisRecorded cost establishing book value and retirement cost.

Lifecycle

States a unit moves through

01ACQUIRED

Purchased or issued credits recorded in inventory with full provenance attributes.

02AVAILABLE

Held unencumbered and included in the portfolio position.

03RESERVED

Committed to a pending retirement or transfer.

04RETIRED

Surrendered with registry confirmation and the associated claim recorded.

05CANCELLED

Cancelled in the registry outside a compliance retirement, with the reason recorded.

06TRANSFERRED

Sold or transferred, with the movement recorded in the ledger.

Obligations

How the compliance position is derived

Voluntary commitments

Where credits are retired against a stated commitment, the commitment is tracked as an obligation so progress against it is measurable rather than narrative.

Compliance application

Where credits are eligible against a compliance obligation, eligibility is evaluated by the rules engine and recorded on the asset.

Claim substantiation

Each retirement retains its project, methodology, vintage, registry reference, and approval record, so a public claim can be substantiated from the system rather than from files.

Reconciliation

What gets compared

Registry holdings compared to platform inventory by project and vintage
Retirement submissions compared to registry confirmations and issued certificates
Portfolio composition compared across project type, standard, and vintage
Platform book value compared to the general ledger balance
Transfers compared to registry account movements

Accounting

Valuation and treatment

Acquisition basis is recorded at the inventory-layer level for every purchased unit.
Retirement cost derives from the recorded basis of the specific layers applied.
Market valuation uses loaded prices where an observable market exists for the credit type.
Accounting events carry the returned ledger document reference.
Portfolio value is reportable by project type, standard, and vintage.