Unlock The World’s

Largest Carbon Market

White Paper - Carbon Credit Technology
Version 2.5 – November 17, 2022
00 Table of Contents

01 Introduction 03
Overview of the Carbon Market 04
What is the EU ETS and EUA? 04
UK Emissions Trading Scheme (UK ETS) 06
Cap and Trade vs Baseline and Credit 07

02 Business Model 11

03 CCT Token 11
Token Design 12
Token Issuance 13
Token Usage 13
Token Value 13

04 CCV Token 14
Carbon Credit Technology Platform 14

05 External Audit 15

06 The DAO 16

07 Carbon Social Game 17

08 Glossary 18

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01 Introduction

Background
Whilst the Paris Agreement1 was a landmark in the effort to combat climate change, there
is a long way to go to achieve the goal of global climate neutrality by 2050. The recent
Intergovernmental Panel on Climate Change (IPCC) report2 highlights that climate risks are
approaching more rapidly and with greater severity than previously estimated. Without
immediate intervention, the catastrophic consequences of rising global temperatures will
only continue to destroy lives, homes, livelihoods, and culture.

Our project, Carbon Credit Technology (CCT), is a response to the many calls to action.
By inviting consumers and businesses to participate in the carbon markets, we influence
the carbon credit prices by increasing the demand side of the equation, which in turn will
incentivize businesses to make more environmentally conscious decisions.

About CCT
We are a digital climate project that democratizes access to regulated carbon credits.
We have created the first cryptocurrency that is notionally backed by the European Union
Allowance (EUA) – the most traded carbon credit in the world3.

CCT’s Mission
By providing unique access to the world’s largest carbon
market through blockchain technology, we revolutionize
climate action for consumers and businesses alike.

1
https://www.un.org/en/climatechange/paris-agreement
2
https://www.ipcc.ch/report/ar6/wg2/
3
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets_en

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Overview of the Carbon Market
Broadly, the function of a carbon marketplace is to allow an entity to purchase credits
(allowances) to offset their carbon footprint, and there are two different types of markets
(compliance and the voluntary) which are summarized below:

Characteristics Compliance Market Voluntary Market

Users Regulated entities (e.g., Private sector
governments and businesses)
Purpose To obtain or transfer emissions To obtain verified carbon credits
allowances for all types of carbon offsetting
activities
Regulation Yes - mandatory national, No - voluntary carbon credits are
regional, or international carbon verified by private entities and
reduction regimes issued/maintained in a private
register

Global Market c. $899 billion4 c. $2 billion5

Value ( 760 €billion)

Market Growth
164%6 282%7
(YoY) 2020-2021
Example EU Emission Trading Scheme (EU Natural-based projects, such as
ETS) - accounts for 90% of total reforestation
global market value8

What is the EU ETS and EUA?

Established in 2005, the EU ETS operates as a “cap and trade” model whereby a limit for
total EU emissions is set and all sectors covered by the emissions trading scheme (with
exceptions) receive a free allocation of carbon credit allowances (EUAs). Each EUA entitles

4
Refinitiv. 2022. Carbon Markets Year in Review. Available at: https://www.refinitiv.com/en/trading-solutions/commodities-trading/carbon-
trading#t-carbon-markets – figures have been converted to USD using 2021 average rate 1 EUR = 1.183 USD
5
Forest Trends Ecosystem Marketplace. 2022. The Art of Integrity: State of Voluntary Carbon Markets, Q3 Insights Briefing. Available at: https://
www.ecosystemmarketplace.com/publications/state-of-the-voluntary-carbon-markets-2022/
6
Refinitiv (n 4)
7
Forest Trends Ecosystem Marketplace (n 5)
8
Refinitiv (n 4)

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The holder to emit one tonne of CO2, or the equivalent amount of another greenhouse gas.
The allocation of EUAs is calculated using EU-wide harmonized rules, therefore companies
that require additional emissions allowances will need to obtain further EUAs either via
auction or secondary market trading.

Effectively, EUAs are the main currency of the EU ETS and therefore companies are
incentivized to reduce emissions to create a surplus, which can be sold to other companies
via the carbon market. Ultimately, this leads to the EU’s cap being met and the price of
carbon is determined by market forces (supply/demand):

Carbon
Market

To accelerate progress and as part of the 2030 Climate Plan, the EU announced a new
target of a 55% net reduction in greenhouse gas emissions by 20309. Starting from 2021,
the EU ETS will decrease the cap of emission allowances at a steeper annual rate of 2.2%
compared to 1.74% previously.

9
https://ec.europa.eu/clima/eu-action/european-green-deal/2030-climate-target-plan_en

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Market Stability Reserve (MSR)
The MSR mechanism was introduced in 2019 to reduce the surplus of emission allowances
in the carbon market and to improve the EU ETS’s resilience to future shocks. In practice
when there are excess EUAs in circulation, a share of these will be automatically transferred
to the MSR where companies won’t be able to auction or trade them. Only if the number of
EUAs in circulation falls below a designated level can these allowances be released back
into the market for auctioning. As a further reform, the automatic cancelation mechanism
prevents EUAs in the MSR from returning to the market at a future date, which curbs future
emissions.

Between 2019 and 2023, the number of allowances deposited in the Market Stability
Reserve (MSR) will double to 24% of the allowances in circulation. The regular feeding rate
of 12% will be restored as of 2024, limiting the number of EUAs in the MSR to around 900
million tonnes of CO210.

Reducing the allowances (EUAs) surplus in the ETS as of 2019:

How the Market Stability Reserve (MSR) and cancellation mechanism work

It is likely there will be upward pressure on EUA prices as carbon credits become more
scarce owing to the reduction in EU ETS supply and the substantially reinforced MSR.

UK Emissions Trading Scheme (UK ETS)

On 1 January 2021, the UK ETS replaced the UK’s participation in the EU ETS. Following
Brexit, the four UK governments established the scheme to provide continuity of emission
trading for UK businesses, whilst also protecting the competitiveness of UK businesses.
The UK ETS operates in a similar way to EU ETS.

10
https://www.consilium.europa.eu/en/press/press-releases/2015/05/13/market-stability-reserve/

6 | Unlock The World’s Largest Carbon Market: White Paper - Carbon Credit Technology
Cap and Trade vs Baseline and Credit
The “cap and trade” model described above is one of two emissions trading scheme
models in operation globally. As an alternative, some markets have a “baseline and credit
model” where a standard level of carbon emissions is defined by regulators. If a company’s
emissions fall below the baseline, they can generate carbon credits which can be sold to
other parties.

The difference between the two models is as follows:

cap and trade – this model sets a maximum limit on carbon emissions in the market
and entities must purchase credits if they exceed the limit.
baseline and credit – this model establishes a standard level of carbon emissions
and companies are incentivized to reduce their emissions below this level to earn
carbon credits. As companies do not necessarily face penalties for exceeding the
baseline, the main drawback of this model is that the emissions target may not be
met due to the lack of rigorous enforcement.

The Global Picture

Whilst both cap and trade and baseline and credit models ultimately aim to reduce
emissions, the difference between the two approaches creates a fragmented global
compliance carbon credit marketplace.

The global voluntary carbon market is equally complex, with a range of projects that are
often unregulated by a single authority. Although often used interchangeably, it is worth
noting that the terminology within the compliance and voluntary markets is distinct:

Term Definition Marketplace

(in general)

Carbon offset A removal of greenhouse gases from Voluntary

the atmosphere
Carbon credit A reduction in greenhouse gases Compliance
released into the atmosphere

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To illustrate the above, the global landscape for the compliance and voluntary market is
summarized in the following diagram:

Compliance and Voluntary Markets

Source: BloombergNEF. Note: ‘ETS’ refers to an emissions trading scheme. CORSIA is the Carbon Offsetting and Reduction Scheme for International
Aviation.

The characteristics of the above international markets are broken down in the following
table:

8 | Unlock The World’s Largest Carbon Market: White Paper - Carbon Credit Technology
The price of carbon credits and offsets is determined by supply and demand factors in
each local market. As illustrated below, price discrepancy is high across different national/
regional markets.

Selected carbon allowance and offset prices

Source: ICE, BloombergNEF. Note: RGGI refers to the Regional Greenhouse Gas Initiative in the US and CBL is a global exchange platform for
transacting energy and environmental commodity products. Dashed lines represent offset prices.

Why CCT?
The EU ETS is not a perfect system, and companies wishing to participate in regulated
carbon trading encounter many obstacles. Using blockchain technology, CCT addresses
the two main challenges of accessing carbon markets and the cost of trading within them
for all users:

1) Access
The barrier to entry for regulated carbon trading is prohibitively high. To participate in the
EU ETS, companies or individuals must open an account in the Union Registry which involves
a cumbersome process of sending a request to the national administrator, who collects
and checks all supporting documentation. Currently, the EUA futures market is dominated
by large utility suppliers and industrial conglomerates, only allowing small and medium-
sized industrial companies to access the spot market, and even more restricted access
for retail investors. Furthermore, existing blockchain carbon credit projects mostly operate
in the voluntary carbon market, such as Klima DAO, Single Earth or Toucan Protocol.

CCT is the only project that provides exposure to EUAs, the largest compliance market.

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2) Cost
In addition to the acquisition costs of EUAs, the below table summarizes the application
and maintenance costs (from April 2021) associated with having an EU ETS trading
account11:

A Category A Category B Category C

Less than 50kt / year At least 50kt and More than 50kt / year
no more than 500kt
Permit application $2,102 $3,938 $9,405
Annual subsistence $4,010 $5,224 $6,421
Variation $666 $666 $666
Transfer $666 $666 $666
Revocation $1,059 $1,059 $1,059
Surrender $1,059 $1,059 $1,059
Allocation from
New Entrant Reserve* $1,761 $1,761 $1,761

By democratizing the current system, CCT will create an ecosystem that enables consumers
to easily invest in EUAs. This will be achieved by launching our CCT Token, a cryptocurrency
with EUAs as the underlying asset that will be listed on cryptocurrency exchanges.
Therefore, retail consumers can trade the CCT Token like any other cryptocurrency asset,
without the costs or barriers to entry of operating in the EU ETS.

11
https://www.daera-ni.gov.uk/articles/emissions-trading-schemes-fees-charges-and-civil-penalties - figures have been converted to USD using
2021 average rate 1 GBP = 1.375 USD
10 | Unlock The World’s Largest Carbon Market: White Paper - Carbon Credit Technology
02 Business Model

Background
The Company will acquire EUAs and releases a matching number of CCT tokens to
cryptocurrency exchanges. There is no fee related to the minting and circulation of CCT
tokens.

For the CCV token subsequently launched, the Company will charge a small creation and
retirement fee, listed below:
Estimated USD value Creation & retirement fee for CCV Token

<$5K 1%
$5K - $50K 0.75%
$50K - $100K 0.5%
$100K - $250K 0.2%
>$250K 0.1%

25% of CCV and carbon social game revenue will be used to buy back CCT after all 600
million tokens have been released into circulation.

The Company may issue new climate tokens in the future with other underlying climate
assets.

03 CCT Token
In early 2022, our token was launched on Algorand as an Algorand Standard Asset. We
selected this blockchain due to its superior sustainability credentials, as Algorand has
been carbon-negative since April 2021. Furthermore according to the founder, Silvio
Micali, Algorand runs on a version of proof-of-stake which drives electricity consumption
to almost zero. All tokens were minted at the inception of the project, and they will be
distributed according to a pre-defined schedule.

The future of Web3 is a multi-chain one. With this in mind, the project team is constantly
evaluating other Layer 1 chains and will seize the opportunity to bring CCT to other
ecosystems.

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Token Design
Each CCT Token represents one kilogram of
regulated carbon.

The Company acquires physical EUA certificates (or its

UK equivalents) from its account with the EU ETS and UK ETS.
One EUA entitles the holder to emit one tonne (1,000 kilograms)
of carbon dioxide or carbon-equivalent greenhouse gas.

Once the Company has acquired the EUA certificates, it will release tokens to one or more
exchanges based on the design that each CCT represents one kilogram of regulated
carbon. For example, if the Company acquires 1,000 EUAs and each EUA entitles the
holder to emit one tonne of greenhouse gas, then 1,000,000 tokens will be released to
the market.

The Company will continuously acquire EUAs in batches according to a pre-defined

schedule. After purchasing a batch, the Company will release a set of CCT tokens to the
exchange and collect funds from the market which will be to acquire additional carbon
credits.

The timing of three batches is illustrated below:

12 | Unlock The World’s Largest Carbon Market: White Paper - Carbon Credit Technology
Regarding the composition of the batches, their size is not fixed and the number of lots
in a batch will gradually increase. However, the Company will solely manage the process
and can freely adjust the number of EUAs purchased to reflect market demand.

Token Issuance
The total number of CCT Tokens will be 600,000,000. Each token is a single unit, and
they cannot be divided into smaller units. All tokens will be minted at the inception of the
ecosystem and kept in the reserve account controlled by the treasury. New tokens will
only be released into circulation when at least an equivalent amount of EUAs have been
purchased by the Company. All EUAs are held on a single Union Registry controlled by the
EU. As for UK allowances, these are recorded on the UK Emission Trading Registry.

Token Usage
CCT Tokens can be used for the following:
Staking for token rewards related to overall economic activities
Voting and participating in the DAO
Playing the Carbon Social game
Paying for services in the network

Token Value
The price of EUA serves as the floor value for each CCT token. If the token price drops below
the floor value, the Company will buy back the tokens and sell the underlying certificates.

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04 CCV Token

The project is due to issue a CCV token with the 1 CCV =

underlying asset being a verified voluntary carbon credit. 1kg of verified
voluntary carbon
Similar to CCT tokens, each CCV Token represents 1 kilogram
of verified voluntary carbon. Voluntary carbon credits are
mostly generated through nature-based projects around the world.
These credits will then be verified by private, not-for-profit entities who ensure that a
sequestration activity has occurred. Each private entity maintains a ledger that logs the
verified carbon credits and all transaction activities.

Carbon Credit Technology Platform

The Company is developing a technology platform that provides a one-stop solution
for carbon transactions. Qualified projects can tokenize, circulate, and retire generated
carbon credits. Simultaneously, individuals and investors can take advantage of carbon
offset solutions.

Credit Origination
CCT sources carbon credits from certified projects only. The Company maintains good
relationships with leading brokers and various quality projects that are verified by widely
recognized international standards. The full list of verified carbon credits acquired will be
released at the launch of CCV token.

Tokenization & Circulation

CCT will mint new tokens for the sourced carbon credits and facilitate carbon credit
exchanges between sellers and buyers. The bookkeeping and accounting entries will be
recorded on-chain.

Token Burn/Credit Retirement

Token holders burn the carbon credit tokens when the underlying carbon credits have
been retired.

Carbon Credit Registry

CCT will keep a digital record of credit registry which can be accessed via API.

With the launch of CCV token, our project covers both compliance and voluntary carbon
credits. This in turn provides complete carbon market exposure to our token holders.

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05 External Audit

The Company maintains robust

internal procedures for carbon trading
and inventory management and will
appoint one of the Big 4 accounting
firms to conduct periodic, independent
audits. These audit reports will be
available on the company website
and will ensure the Company meets
the requirements of the token holder
agreement at all times.

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06 The DAO

The CC ecosystem adopts DAO governance

whereby participants in the DAO will be owners and managers of the entire CCT
network.

Initially, the decision-making will reside with the founding team. Gradually, it will involve
early investors, community leads and asset owners. Ultimately, token owners will
collectively decide the direction of travel for the entire ecosystem.

Our First subDAO - CC Startup DAO

No one can save the earth alone - CC Startup DAO is the subDAO that aims to support
the growth of the CCT ecosystem. In total, $25,000 fiat + $25,000 CCT tokens will be
initially committed to support new and rising digital climate projects. Selected projects
will also be featured on the CCT website and its social media pages.

Future SubDAOs
Subject to community votes, the CCT team will continue to roll out subDAOs that are
in line with our mission and serve our community. Some subDAO ideas currently under
consideration include a CCT NFT DAO that raises funds by selling Climate NFTs and
deploys these funds to further build out the ecosystem.

16 | Unlock The World’s Largest Carbon Market: White Paper - Carbon Credit Technology
07 Carbon Social Game

Carbon Social Game is a lifestyle gaming app that enables environmentally conscious
individuals track and offset their daily carbon footprint.

How to play
1. In the App users will select their “transportation mode” and press “start tracking”.
2. Users will press “stop” when they have arrived at their destination.
3. The App will automatically calculate the carbon emissions and/or carbon credits
generated based on the transportation vehicle and distance traveled (compared to
traveling in a car or airplane).
4. There is an option to enter other categories such as food or energy consumption for
the user to record their daily carbon footprint.
5. Transportation is the mandatory information that is required to earn carbon credit
tokens.
6. Entering additional categories will enable users to earn more tokens.

In-App Social
1. Users can find community members locally and globally.
2. Users can send in-app message to like-minded;
3. User can send carbon credits to their friends.

Tokens Rewards
1. Users can earn CCV tokens by tracking their carbon
footprint daily with transportation the mandatory field.
2. Additional tokens will be earned if users provide carbon
footprint information in additional categories
3. Users can complete challenges/quizzes to earn extra
tokens.

Token Burn Mechanism

1. Users can burn/retire CCV to offset their carbon footprint
2. After burning a certain amount of CCV, users are eligible
to claim an environmental NFT
3. The NFT(s) will enhance users’ ability to earn more CCV
tokens.

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08 Glossary
A system by which an upper limit is set on the amount of Greenhouse Gas a given
Cap-and-trade business or other organization may emit but which allows further capacity to be bought
from other organizations that have not used their full allowance.

A carbon credit is a generic term for any tradable certificate or permit representing the
Carbon Credit right to emit one tonne of carbon dioxide or the equivalent.

The amount of carbon dioxide released into the atmosphere because of the activities of
Carbon Footprint
a particular individual or organisation.

Compliance carbon markets are marketplaces through which regulated entities

Compliance obtain and surrender emissions permits (allowances) or offsets to meet predetermined
Carbon Market regulatory targets.

A decentralized autonomous organization (DAO) is a governance system where the rules

DAO are programmed by computer language to distribute decision-making, management,
and entity ownership.
Emission Trading System. A system used by many major economies to regulate carbon
ETS
trading and incentivise positive climate actions.

EU Allowances (EUA) are tradable emission allowances used in the European Union
EUA Emissions Trading Scheme (EU ETS). One allowance gives the holder the right to emit 1
tonne of CO2 or its equivalent.

The European Union Emissions Trading System is a «cap and trade» scheme where a limit
is placed on the right to emit specified pollutants over an area and companies can trade
EU EUETS
emission rights within that area. It is the largest multi-country, multi-sector greenhouse
gas emissions trading system in the world.

Greenhouse gas emissions are gas emissions that cause the greenhouse effect. Carbon
dioxide (CO2) makes up the vast majority of greenhouse gas emissions. The other
GHG Emissions five covered by the UNFCCC/Kyoto Protocol are methane (CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6), and
nitrogen trifluoride (NF3).

Market Stability Reserve was introduced to the EU ETS in 2019. It helps regulate total
MSR EUAs in circulation and provides price stability for EUAs. Every year, a portion of EUAs will
be withheld from the market and placed into MSR. The MSR is presently set to reduce
%24 of circulation supply until 24 – 2023, after which the rate will drop to %12.
Carbon Carbon sequestration is the process of storing carbon in a carbon pool. Forests and
Sequestration woodlands are considered one of the best forms of natural carbon sequestration.

A UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS on
UK ETS 1 January 2021. The four governments of the UK have established the “Cap and trade”
scheme to continue to incentivize positive climate actions from regulated entities.

Carbon credits verified by an industry recognized standard normally owned by a

Verified Voluntary
non-profit non-governmental organisation. The most known international standards in
Carbon Credit voluntary carbon credit markets include Verra and Gold Standard.

Run by the private sector, it encompasses all types of carbon offsetting activities that do
Voluntary not contribute to regulated carbon reduction regimes. It allows carbon emitters to offset
Carbon Market their emissions by purchasing carbon credits created by projects targeted at removing or
reducing GHG emissions.

18 | Unlock The World’s Largest Carbon Market: White Paper - Carbon Credit Technology
For more infomation, please visit:
www.cct.co