Delivering new levels of transparency and equity in carbon market transactions

When you think of carbon trading, you might picture large companies buying carbon credits from equally large organizations focused on reducing or removing greenhouse gas emissions. While this is often how carbon markets operate, there is much more happening beneath the surface. Look closer and you’ll find smaller, innovative organizations driving meaningful change, such as FairClimateFund (FCF), which is pioneering new, community-centered approaches to carbon finance.

Headquartered in the Netherlands, FCF works to make carbon markets accessible to low-income households all over the world. Recognizing the climate threats posed by large-scale, open-fire and charcoal cooking in households in rural and peri-urban areas in countries such as Chad, India and Rwanda, FCF provides these households with clean cooking solutions. Accounting for their individual cultures and conditions, each country has its own preferred clean cooking solution. Refugees in Chad use solar cookers, for example, and Rwandans are using cookstoves fueled by pellets made from wood waste and agricultural byproducts.

The CO₂ reduction achieved by switching from charcoal or open fire to a clean cooking solution is calculated as a carbon credit, with one credit representing one ton of CO₂ reduced. FCF’s approach is designed to ensure that individual households, particularly women, receive the greatest benefit from the sale of the carbon credits.

Bridging the gaps in carbon markets

Engaging low-income households in remote, rural villages and peri-urban communities in global carbon markets presents both logistical and data challenges. Many projects in the sector lack traceability, making it difficult to see where the revenue from carbon credits goes or who truly benefits. FCF is committed to changing this by providing transparency in an otherwise opaque market. FCF ensures that credits can be traced back to the households generating them and facilitates direct payments.

SAS partner innovation: data transparency for carbon exchanges

For FCF, delivering on its promise of transparency requires operating at the center of a range of complex data flows, starting with:

• Customer data
• Fuel pellet transactions
• Cash-back refunds to households

Historically, it has been virtually impossible for carbon credit projects to generate transparent reports on the social impact of credits. Additionally, the turnaround time for external audits can often span two to three years, resulting in a long gap before determining returns on investments. These processes were exposed to the risk of errors due to manual data verification. 

For years, FCF managed all this information on spreadsheets, which was inefficient and time-consuming. The organization knew that if it could gather, manage and analyze this data faster and more effectively, it could secure carbon credits more quickly and ramp up cash flow to make additional investments and have a bigger impact on a larger scale. So FCF tapped Rotterdam-based Notilyze, a SAS partner specializing in managed analytics services, to develop a better approach that would take advantage of enterprise-class analytics solutions. 

A platform for measurable impact and social change

FCF initiated this project with the goal of building a platform for accurately tracking carbon reductions from its projects, as well as their broader social impact (including cash-back payment amounts received by households). Gold Standard, the certification organization for carbon credits, saw the promise of such a platform and agreed to work together with FCF on a pilot program. Based on the results of this pilot effort, the platform could set a new standard for digital transparency and encourage many more organizations to join.

Notilyze built the platform using SAS Viya 4, running on Notilyze Cloud. The Notilyze dMRV (digital monitoring, reporting and verification) platform is built with SAS Viya at the core. It draws from three different sources of data – customer data, fuel pellet transactions and cash-back refunds to households – to construct accurate weekly monitoring of carbon credit values and transactions for all parties involved in carbon credit transactions. The dMRV platform offers this visibility primarily through two views:

Dashboard – Notilyze developed a document interface in SAS Visual Analytics that replaces the spreadsheets previously used for the project. This interface allows users to perform carbon calculations using project data. It also enables users to save the calculations in the database, making them easier to validate. As a result, the interface increases transparency and reduces the time needed to validate the credits.

Notilyze also developed a SAS Visual Analytics dashboard connected to this document interface, which updates automatically and shows projects’ current impact – from total CO₂ reductions to the specific ways the cookstoves advance relevant sustainable development goals for women. This dashboard provides clear insights into key KPIs.

Outlier report – Notilyze performed outlier checks to ensure high data quality. These checks evaluate the data against predefined business rules and statistical outlier criteria. The result of these checks is presented in the outlier report.

This full suite of analytics and reporting capabilities is delivered to FCF as a managed service from Notilyze, so this small not-for-profit organization doesn’t need to make additional investments in technology infrastructure to achieve enterprise-grade data insights. It’s also fully compliant with rigorous Gold Standard certification requirements. 

Transforming households and advancing climate goals 

“The Notilyze dMRV platform shows exactly how much of the sale of carbon credits goes to participating low-income households,” says Neera van der Geest, FCF’s Director. “There’s nothing else like it – no other digital carbon credit platform is able to deliver this level of transparency and reliability.”

The follow-on effects are equally important. By further digitizing and automating the process of monitoring household usage and distributing credits, instead of sending researchers into the field to collect data manually, the cost per credit is reduced. This shift allows a larger share of the carbon credit revenue to go directly to households.

As FCF expands its reach, participating households are making significant contributions to climate action while simultaneously improving their quality of life. They face fewer risks from collecting traditional fuels and benefit from a cleaner, safer, more sustainable energy source for cooking.

The next phase for FCF is to integrate all its projects into the Notilyze dMRV platform. FCF also intends to make this digital infrastructure accessible to other carbon credit developers, helping them improve the impact and transparency of their own projects. By sharing the platform across the sector, FCF aims to establish a higher standard of digital transparency in the carbon market.

“Transparent reporting on the CO₂ reduction and social impact of climate projects is increasingly important in the carbon credit market,” van der Geest concludes. “As a relatively small organization, we can use the power of SAS to drive real impact. SAS has a strong history in sustainability, and we can help carry that work forward.”