Artificial intelligence (AI) could improve transparency, accuracy, and efficiency in the voluntary carbon market, says a new white paper which offers practical guidance for organisations working to meet carbon emissions reduction targets.
The Future Investment Initiative (FII) Institute, in collaboration with Aramco and Arthur D Little (ADL), has released a white paper titled “AI-Enabled Carbon Markets: Identifying AI Solutions for the Voluntary Carbon Industry.”
Addressing evolving challenges in the carbon market, such as project identification, cost overruns, and regulatory as well as market complexities, the white paper emphasises AI as a tool for overcoming issues like pricing transparency and the risk of greenwashing.
It highlights AI’s potential to contribute to enhancing the breadth, consistency, and integrity of carbon credits, with the aim of providing companies with greater confidence and precision in pursuing carbon emissions reduction.
Four ways AI can help
The publication identifies four primary ways AI could help advance the voluntary carbon market:
1. Carbon quantification: AI technology could have the potential to enhance the precision of carbon sequestration measurements, allowing for more accurate assessments of project impacts and better prioritisation.
2. Transparency: AI is expected to enable real-time monitoring of carbon offset projects, providing verified emissions data that could contribute to building stakeholder trust.
3. Integrity: The use of AI may mitigate the risk of greenwashing by identifying discrepancies between reported and actual carbon reductions, which could help bolster the credibility of carbon credits.
4. Pricing forecasting: AI-driven models could offer dynamic, data-based valuations for carbon credits, with the aim to support market participants in making well-informed decisions.
Musaab M Al Mulla, Aramco Vice President of Market Analysis and Sustainability, said: “We see the voluntary carbon markets as a unique and important lever in supporting a practical and orderly energy transition. However, for the market to reach its considerable potential to mitigate carbon emissions at scale, a number of key challenges will need to be addressed. This white paper showcases AI’s potential role in helping to make carbon markets more transparent and efficient. Integrating AI could support organisations in enhancing the reliability and accountability of their carbon emissions reduction efforts."
Carlo Stella, Managing Partner and Global Practice Leader for the Sustainability Practice at Arthur D Little, said: “AI’s role in carbon markets is essential for organizations aiming to achieve meaningful and measurable progress. This white paper highlights AI’s potential to improve accuracy in carbon reduction measures, a critical factor to improve confidence among adopters."
Richard Attias, CEO of FII Institute, said: “Our collaboration with Aramco and Arthur D Little reflects a shared goal of leveraging technology to enhance efficiency. This publication is a vital resource for any organization focused on making credible, impactful advances in carbon emissions reduction through AI-driven carbon markets.”
Opportunities and challenges in carbon markets
With AI solutions in place, organisations could address market challenges such as inconsistent policies, budget overruns, and lack of pricing transparency. The insights offered here are expected to provide a strategic guide for entities participating in voluntary carbon markets, with the aim of enhancing their ability to meet sustainability goals within an evolving regulatory landscape, the report said. -OGN/TradeArabia News Service
