CarbXEnergy transition will succeed when risk is priced, CO₂ storage is available and markets are built to last.
CarbX is building an activation financing and trading platform to:
- Accelerate development of Carbon Capture and Storage pathways
- Deploy risk-informed financial instruments like Carbon Storage Options
- Trade CO₂ storage and Options to broaden markets and mitigate risk
A Dilemma
Most economies depend on hard-to-abate industries.
Large industrial EmitCos in the EU face complex decisions about when to invest in carbon capture technology and connect to CCS pathways or hubs to facilitate long-term storage.
Before committing capital, they must anticipate future costs — carbon prices, technology curves, infrastructure tariffs — and their timing.
Delaying decarbonisation increases financial and reputational risks.
The Rising Cost of Inaction
In the EU, under the EU ETS, EmitCos are incentivised to act now to avoid escalating carbon taxes. Free EU Allowance (EUA) allocations phase out by 2034.
Without a CCS pathway, the cost of compliance will only increase: forecasts suggest EUAs could reach €150 per tonne by 2035. This may well become unsustainable.
Installing a CCS Pathway
EmitCos with access to economically-viable pathways can significantly save on compliance costs by capturing, transporting and storing CO₂.
Only geological storage has the capacity to meet future demand at scale. Methods like ICM (in-situ carbon mineralisation) provide a low cost and safe (permanent) solution.
Growing Demand for CO₂ Storage
In the EU, the demand for CO₂ storage is expected to increase by a factor of 10 between 2030 and 2050. Transportation requirements will grow to keep up with the demand.
Scarcity of storage will be a constraint of EU decarbonisation.
CCS Pathways Need Financing
CCS pathways are not developing fast enough. Capital arrives too late because the risk is too concentrated and too illiquid.
- CO₂ storage projects typically require 7.5 years or more from licencing to development.
- The lack of finance slows the development of CCS pathways.
- When capital is illiquid, investors cannot gain returns - further increasing its cost and making it harder to access.
- The delay in implementing CCS pathways creates significant costs for industry as a whole.
CarbX is unlocking strategic capital to accelerate the development of CCS pathways, enabling EmitCos to mitigate and hedge against compliance costs.
Activation Capital for Projects
CarbX is developing the capability to finance CO₂ storage projects through the trade of instruments such as our CSO and other hybrids.
A CSO - which is a call option - represents a claim on verified, future CO₂ storage. Its value is tied to fundamental underlying aspects and development progress of the storage project that it funds.
- Projects can issue tranches of CSOs over time, risk-priced to progressively achieve development and operational objectives to which they are tied.
- Successive tranches would be priced differently and could be traded via CarbX platform.
- As more projects are financed and developed, more CSOs are traded. This deepens liquidity and attracts investors to new opportunities.
CarbX provides the strategy to raise capital for the development of CCS pathways faster. The finance is non-dilutive for early-stage storage development. Trading CSOs becomes profitable as projects and markets mature.
Hedging for Earlier Mitigation
EmitCos can take early action by purchasing CSOs via the CarbX platform. This reduces storage costs, guarantees storage availability, and ensures the development of sufficient, economically viable CCS pathways.
Hedging Strategies for Stranded EmitCos
Some EmitCos are not located close to economically viable CCS pathways. They need to devise plans to mitigate against compliance costs with an effective hedging strategy.
- Each EmitCo requires a hedging strategy that suits its future compliance cost liabilities.
- This can be constructed on portfolios of options, with varying risk profiles but common homogeneity.
- 'Bundled’ options, heterogeneous in nature, can be risk-matched to compliance exposure for greater flexibility.
- With dynamic hedging strategies, ‘stranded’ EmitCos can also hedge (and transform) their hard-to-abate projects.
The CarbX Trading Platform
CarbX is building the technology to incubates, grow, and operate the Carbon Capture and Storage market.
- Incubate storage projects.
- Buyer / Seller discovery.
- Trading Storage, CSOs and hybrids.
- Contracts management and Escrow.
CarbX is mobilising Activation Capital to accelerate the creation of CCS pathways, consistent with energy transition objectives.
We are creating a portfolio of tradable financial instruments starting with CSOs, and our trading platform aims to become the global marketplace to trade CO₂ Storage Contracts.
CarbX will facilitate greater market activity and encourage a wider range of investors into energy transition projects.