"Nothing will knock this market off course"

Helping corporations navigate a carbon-constrained world means being nimble, responsive – and developing world-beating blockchain technology – says Co-Founder and Managing Director of AirCarbon Exchange (ACX), William Pazos, winner of Best Carbon Exchange in the 2022 Environmental Finance Voluntary Carbon Awards.

Environmental Finance: What do you think makes ACX the best carbon exchange?

William PazosWilliam Pazos: I think what distinguishes AirCarbon Exchange (ACX) from the competition is that we listen to the market and are constantly evaluating their requirements and quickly addressing them. For example, this year we launched an auction platform and a carbon markets board.

Both are features that were driven by the market. That, together with our innovative blockchain technology, we believe drives this recognition. We have spent a lot of time and resources developing what we think is best in class.

Our technology stack was built from scratch to be the most effective way to trade and manage carbon assets. The market recognises and rewards us for setting the bar in this regard. We have a very good relationship with everyone on our platform and we are in constant dialogue with them. For example, we are re-evaluating the contracts currently traded our exchange. This is being done collaboratively with our customers.

EF: How do you think COP26 has affected the market over the last year?

WP: It's certainly been a very interesting year. The market has been grappling with the after effects of the COP26 meetings in Glasgow. Voluntary carbon is becoming more significant, and several countries are making changes as they try to come to terms with the Paris Accords. For example, Indonesia has moratorium on credits until they can resolve their regulatory framework. All of this means that we must be on our toes.

The landscape is changing and so is the way we do business. Obviously, the economic malaise that seems to be taking hold globally due to inflationary pressures and the war in Ukraine has put a dampener on the market, and prices have come off significantly since the start of the year. But in the last couple of months that has changed and prices seem more upwardly mobile. I think the market had over corrected and now it is finding a better floor.

EF: How is ACX adapting?

WP: We are innovating. An unintended consequence of the Paris Accords is that many countries around the world now want to have a domestic carbon marketplace. This plays right into our main strategy. We see ACX as a distributed network that can be applied in local voluntary carbon markets so that they can have connected order books. We have designed our technology around this principle so that, for example, if a carbon credit offered in Brazil, it will also be seen in Singapore, Abu Dhabi, and all the other markets using our platform. I have no doubt we will see significant growth going forward. It seems to me that the urgency of fighting climate change is now very apparent in our physical world, as the recent horrific flooding in Pakistan has shown.

Unlike other commodities, scarcity in the carbon markets is a function of political will. However, the prevalence of catastrophic climate events has protected climate action for the vagaries of domestic politics. It is absolutely the case that we are moving into a carbon constrained world and the carbon markets offer the most efficient way to reduce carbon. I feel very bullish on this. Nothing will knock this market off course in the long term.