Carbon credits non-fungible tokens pioneer DeepMarkit Corp (TSXV:MKT) is considering expanding its strategy to include another fast-growing market, that of Renewable Energy Certificates (RECs).
Through its subsidiary First Carbon Corp. the company is working on turning carbon offsets into NFTs minted using its Mintcarbon.io platform. The platform makes it possible for projects generating carbon offsets and certified through an official carbon offset registry to create tokens that can later be traded elsewhere, such as on the NFT marketplace OpenSea. Venturing into RECs would open up a market that could be worth $100 billion by the end of this decade.
The growing market for ‘green tags’
REC, also known as green tags or tradable renewable certificates, are market-based instruments showing that one-megawatt hour of electricity was generated from an eligible renewable energy source. As with carbon offsets, the provider of renewable energy receives a REC, which can later be sold on the open market as an energy commodity.
A tag is also a form of a tracking mechanism. Electricity from renewable energy is impossible to distinguish from electricity produced by any other source, so RECs can provide that tracking for solar, wind, and other green energies as they flow into the power grid.
“RECs represent a significant market segment for DeepMarkit. Based on input from our corporate development team, the MintCarbon.io platform’s ability to seamlessly integrate RECs, combined with positive feedback received from renewable energy sector participants, make our decision to explore entering into this market an easy one,” said Ranjeet Sundher, Interim CEO of DeepMarkit.
Research company Precedence Research estimates that the value of the global REC market will grow rapidly from around $12.7 billion in 2021 to S$100 billion by 2030. This compares with the voluntary carbon credit market which surpassed $1 billion in market value late last year.
For the moment, North America dominates the global renewable energy certificate market mainly because of the stricter government regulations regarding carbon emissions and the development of renewable energy sources across the region. Precedence Research estimates that the trade of renewable energy certificates in the US and Canada will continue to gain traction between now and 2030.
Europe expected to be fastest growing market
But the fastest growth in the REC market is expected in Europe because of the rising demand for green energy across different industries. Europe’s increased focus on achieving sustainability and reducing carbon footprint as well as significant inflow of investments is creating a supportive environment for the growth of the renewable certificate market.
The minting of RECs will complement DeepMarkit’s existing plans for carbon credit NFTs. The company anticipates substantial interest from both retail investors and institutional interest for the tokens which could be sold either individually or bundled up to create substantial carbon offsets.
MintCarbon.io is one of the first movers in this space and is very close to being able to start commercial minting of carbon credits. This could potentially be an incredibly important market, allowing smaller holders of carbon credits to realise their value more easily.
Earlier this month DeepMarkit finalised its deal with Malaysia’s Radiance Assets to set up a pipeline of potential carbon credit projects for onboarding to DeepMarkit’s carbon credits platform.
