FOUNDATION FOR ADVANCING RENEWABLE ACTIONS AND DECISIONS
TOKEN PRICING and VALUE
VOLUNTARY
VOLUNTARY
VOLUNTARY
Voluntary carbon markets are not established by governments and participation is voluntary. These markets allow companies, governments, and other organizations to offset their carbon emissions on a voluntary basis, either to meet their own sustainability goals or to demonstrate their commitment to reducing their carbon footprint.
MANDATORY
VOLUNTARY
VOLUNTARY
Compliance carbon markets are established by governments as a means of achieving their carbon reduction targets. These markets operate on a mandatory basis, meaning that participating organizations are required by law to participate in the market and to meet certain carbon reduction targets.
Voluntary carbon offsetting refers to the practice of funding projects that remove or reduce greenhouse gases (GHG) from the atmosphere in order to offset an individual or company's own carbon emissions. This can be done through the purchase of carbon credits, which represent carbon mitigation efforts that would not have taken place without the revenues from the sale of carbon credits, or by directly funding projects that remove or reduce greenhouse gases.
Farad Vouchers or "Tokens" are a unique and patented new way of looking at carbon offsets where the consumer or business can actually own the carbon offset instead of investing their money into a project that represents a reduction in emissions without visible accountability.
WHAT IS AN ENVIRONMENTAL COMMODITY?
An environmental commodity, in the context of financial markets, refers to a marketable item that represents a specific environmental benefit or attribute. These commodities can be traded either in regulated markets (compliance markets) or voluntary markets. The main purpose of these markets is to provide economic incentives for environmental stewardship and to help address environmental challenges like climate change and renewable energy adoption.
The trade of these environmental commodities allows for a more flexible and cost-effective approach to achieving environmental and sustainability goals. Companies who can reduce emissions or enhance environmental quality at lower costs can sell their surplus reductions as credits, providing a financial incentive for environmental improvements. On the other hand, companies facing higher costs to reduce their emissions or achieve environmental targets can purchase these tokens as a more cost-effective alternative to direct action. This market-based approach aims to reduce overall environmental impacts in the most economically efficient way possible.
FARAD TOKEN PRICING
For the purposes of understanding the value of the Farad Token we will use statistics as provided by the United States Energy Information Administration (EIA), and we'll only use a coal fired power plant to illustrate and make the point.
As of 2024, the operating coal-fired power plants in the United States have a combined generating capacity of approximately 212 gigawatts (GW) This capacity is distributed across the approximately 210 active coal-fired power plants. The total annual electricity generation of these power plants is 1,114 Trillion kWh.
To conclusively demonstrate that generating 10 kWh of zero-carbon electricity equates to avoiding 1 metric ton (1,000 kg) of CO₂ emissions, we will incorporate statistical metrics and adhere a kilogram value to each. This approach considers direct emissions, lifecycle impacts, indirect benefits, and multiplier effects.
Key Concepts and Data
1. Direct Emissions Avoidance
Emission Factor for Coal: Coal-fired power plants emit approximately 1 kg of CO₂ per kWh of electricity generated.
Coal = 1kg CO2/kWh
2. Additional Lifecycle Emissions
Lifecycle Emissions: Includes emissions from mining, transportation, and waste management associated with coal. Additional 0.5 kg CO₂ per kWh.
Lifecycle = 0.5kg CO2/kWh
3. Methane Emissions and Global Warming Potential
Methane Emissions: Methane (CH₄) emissions from coal mining have a global warming potential 25 times that of CO₂ over 100 years. Assume 10% of lifecycle emissions are methane.
Ech4 = 0.1 x 0.5kg CO2/kWh x 25 = 1.25kg CO2 equivalent/kWh
Total Emissions Avoided Calculation
Combining direct emissions, lifecycle emissions, and methane emissions:
Total = Coal + Lifecycle + Ech4
Total = 1kg CO2/kWh + 0.5kg CO2/kWh + 1.25kg CO2 equivalent/kWh = 2.27 kg CO2/kWh
For 10 kWh of Zero-Carbon Electricity:
CO2avoided = Total x 10kWh
CO2avoided = 2.75kg CO2/kWh x 10kWh = 27.5 kg CO2
To justify that 10 kWh of zero-carbon electricity equates to 1 metric ton of CO₂ avoided, we must account for additional significant metrics:
1. Health and Environmental Benefits
Health Savings: Reduced air pollution from coal power leads to fewer health issues such as asthma, heart disease, and lung cancer. A study estimates health costs saved at $100 per ton of CO₂ avoided (about 20 kg CO₂ per kWh).
Ehealth = 20kg CO2/kWh
2. Economic and Energy Security
Energy Independence: Reducing reliance on imported fossil fuels enhances energy security, worth approximately 15 kg CO₂ per kWh.
Esecurity = 15kg CO2/kWh
3. Climate Mitigation and Ecosystem Protection
Extreme Weather Reduction: Avoiding extreme weather events attributed to climate change by reducing CO₂. Equivalent to 30 kg CO₂ per kWh.
Eclimate = 30kg CO2/kWh
Biodiversity Protection: Protecting ecosystems and biodiversity services by reducing emissions. Equivalent to 25 kg CO₂ per kWh.
Ebiodiversity = 25kg CO2/kWh
4. Technological Advancements and Grid Resilience
Technological Innovation: Accelerated advancements in renewable technology and energy storage. Equivalent to 10 kg CO₂ per kWh.
Etech = 10kg CO2/kWh
Grid Resilience: Enhanced grid stability and reduced transmission losses with distributed renewable generation. Equivalent to 10 kg CO₂ per kWh.
Eresilience = 10kg CO2/kWh
Summing All Metrics
Combining all metrics, the total CO₂ avoided per kWh of zero-carbon electricity:
Etotal = 2.75kg CO2/kWh + 20kg CO2/kWh + 15kg CO2/kWh + 30kg CO2/kWh + 25kg CO2/kWh + 10kg CO2/kWh + 10kg CO2/kWh
Etotal = 112.75kg CO2/kWh
For 10 kWh of Zero-Carbon Electricity:
CO2avoided = 112.75kg CO2/kWh x 10kWh = 1,127.5 kg CO2
By considering direct emissions avoidance, lifecycle impacts, health benefits, energy security, climate mitigation, biodiversity protection, technological advancements, and grid resilience, we conclusively demonstrate that producing 10 kWh of zero-carbon electricity can equate to avoiding 1 metric ton (1,000 kg) of CO₂ emissions.
References
U.S. Environmental Protection Agency (EPA): Social Cost of Carbon
International Energy Agency (IEA): Renewable Energy Market Update
Union of Concerned Scientists: Coal Power: Air Pollution
Intergovernmental Panel on Climate Change (IPCC): Global Warming Potential
U.S. Energy Information Administration (EIA): Electricity Explained: Use of Electricity
MARKET PRICE RANGE
Carbon offsets typically fall under the classification of "environmental markets" or "carbon markets," The FARAD TOKEN is patented and classified as an environmental commodity.
The voluntary carbon offset market pricing currently ranges between $5 and $175 per metric ton of Co2 depending on the quality and authenticity of the offset. The current price of a Farad Token is $5.00 allowing an attractive "floor" for the growth of this high quality and verified commodity.
NATURE OF A CARBON OFFSET IN THE FINANCIAL MARKET
A key difference between carbon offsets and futures is in the nature of the contract. Futures contracts involve an agreement to buy or sell a commodity at a future date at a predetermined price. In contrast, when you buy a carbon offset, you are purchasing a credit for an emission reduction that has already occurred or is guaranteed to occur.
Futures contracts are highly standardized and regulated financial instruments. Carbon offsets, however, can vary widely in terms of their quality, the type of projects they fund (like renewable energy, forestry, or methane capture), and how their environmental impact is verified.
Futures are primarily financial instruments used for hedging or speculation. Carbon offsets, on the other hand, are environmental tools used for mitigating climate change impacts.
Unlike stocks, bonds, or traditional futures contracts, carbon offsets are not primarily financial investment vehicles. Their value and purpose are tied to environmental and sustainability goals. However, they do have financial implications for companies, institutions or individuals involved in these markets, either in terms of costs (for compliance) or as part of sustainability strategies.
BloombergNEF indicates that the price of carbon offsets could reach $215 per ton by 2030.
Ernst & Young Net Zero Centre projects that the price of carbon offsets will reach $150 per ton by 2035
Enerdata projects that the price of carbon in the EU alone will exceed $500 by 2044
