For over a year, Solid World’s team of climate scientists and technology experts have been developing a groundbreaking framework that is set to revolutionize the way forward carbon credit deals are evaluated within the rapidly growing Voluntary Carbon Market (VCM).
This framework is called CRISP (Carbon Risk Identification and Scoring Principles).
What is CRISP?
CRISP is an innovative carbon risk assessment tool, licensed under Creative Commons. It provides a comprehensive framework for understanding and quantifying the major factors contributing to the non-delivery of carbon credit units. By examining these crucial risk factors, CRISP empowers all stakeholders to make informed decisions and more effectively support global climate action initiatives.
Solid World’s protocol delivers advanced payments to climate projects and provides a detailed risk rating framework associated with forward financing. Recognizing the imperative of transparency and collaboration in combating climate change, Solid World is releasing this framework as a public good. As a result, carbon projects, financiers, and sustainability teams everywhere can assess their risks with greater confidence.
Understanding the Risk Factors
CRISP’s approach to risk assessment is comprehensive and multifaceted. It encompasses:
- Carbon Yield Risk: Estimates the likelihood of credit yield based on scenario modeling (realistic and optimistic predictions). Improved accuracy through remote sensing, up-to-date data, and in-depth research.
- Climate Catastrophe Risk: Utilizes proprietary climate models to estimate the probability of climate-related events affecting project outcomes.
- Policy and Legal Risk: Assesses risks at the national/jurisdiction and project levels using pre-set indicators to gauge the strength of legal and policy environments.
- Financial Risk: Estimates vintage-specific financial risk using complete data (holistic financial models) or limited data (break-even year and yield models) methods, depending on data availability.
- Project Developer Risk: Analyzes the strength of project developers using standard indicators, such as developer experience, project team strength, and project network strength.
The framework then calculates net forward risk scores based on the weighted sum of these factors. These scores are categorized into ratings ranging from AAA (prime) to D (junk), to help Solid World make informed decisions.
Creating a Transparent and Reliable Market
Solid World CEO, Stenver Jerkku, emphasizes the commitment to setting new industry standards for transparency and risk assessment. He invites leading players to collaborate and ensure accurate project risk ratings, ultimately transforming the underwriting process and fostering greater trust in the climate finance space.
With the release of CRISP, Solid World not only facilitates the growth of the carbon credit market but also enhances the credibility of reforestation projects. It empowers sustainability teams, investors, traders, and other stakeholders in the voluntary carbon market ecosystem, fostering a more transparent and reliable market.
The Industry Response
Leading voices in the industry have praised the release of CRISP. Paul Young of Kita, a renowned carbon insurance company, views CRISP as a monumental step in the fight against climate change.
Solid World anticipates a broad adoption of the CRISP framework across the industry. As the world’s first tool of its kind, CRISP is positioned to set a new industry standard for the assessment of carbon forwards.
In releasing CRISP, Solid World is laying the groundwork for a more robust, inclusive, and effective approach to evaluating the potential of carbon projects worldwide. The launch of CRISP is just the first step in our Path to Liquidity.
A few weeks after CRISP is released to the public, Solid World will be publishing a sample rating to demonstrate how our scoring process works. This sample rating will provide an in-depth look at how each of the risk factors is assessed, weighed, and combined to produce a final rating. By offering this real-world example, Solid World aims to demonstrate the framework’s effectiveness and versatility, enabling market participants to better grasp the importance of CRISP in assessing carbon projects.
Then finally, we will be launching our liquidity pools, which will give new carbon projects access to the advanced funding that they need to get off the ground. This is where you will be able to participate in the protocol and earn rewards while helping to reverse climate change.
Together, we can create a Solid World.
Learn More About Solid World and CRISP
Interested in learning more about CRISP and how Solid World is revolutionizing climate project risk assessment? Visit our website at www.solid.world. You can also join our community on Twitter, Discord and LinkedIn to stay updated on our latest initiatives.