The PAYTECH Book

How Payment Agility and Cash-for-Carbon Can Solve a Global Problem for Mankind

By Alessia Falsarone

Managing Director, PineBridge Investments

PayTech Solutions for Carbon Markets

Global payments technologies are likely to become important enablers of effective policy-making in advancing one of the most pressing issues in society today: climate change.

Since the first carbon trading scheme was launched in 2005, financial innovation has continued to expand the participation of both the public and private sector in international exchanges of carbon credits – in a similar fashion to how commodities such as energy, metals and agricultural products trade in organized markets. The Kyoto Protocol, the leading international effort to advance nation-level dialogue on the need to curb carbon emissions, will expire in 2020. It will be followed by the Paris Agreement, which, although not fully ratified, aims to establish measurable emission targets.

Over time, active interest in carbon markets has led to the customary use of an internal price for carbon by government entities and private-sector enterprises to guide scenario planning across production, distribution and procurement decisions. This was a much needed first step. However, critics of carbon-trading schemes continue to point to the voluntary nature as well as to its decentralized jurisdictional oversight to argue that policy-making may never contribute meaningfully to lower-carbon economies. Instead, payment technologies are best ...