Onyx Transition, a voluntary carbon crediting program, is aiming to tackle climate change by introducing a new credit type known as the “elimination credit”. This credit has been developed based on the concept of “supply-side crediting” and is designed to incentivize oil and gas companies to shut down economically nonviable fields and keep fossil fuels in the ground permanently. By offering these companies an alternative revenue stream in the form of credits that they can sell on carbon markets, Onyx is able to eliminate the emissions that would have been generated by the extraction and combustion of these fossil fuels. The ultimate goal of these credits, known as Eliminate Oil Supply (EOS) credits, is to accelerate the decline of oil production in order to prevent the worst effects of climate change.
One of the main challenges in climate action is the risk of triggering “emissions leakage”, where cutting down emissions in one country leads to an increase in emissions in another less ambitious country. Onyx’s supply-side crediting approach aims to interrupt this “Whack a Mole” effect and create a more globally coordinated response to climate change. This method also generates revenue that can be invested in low carbon technologies, further accelerating the transition to a greener economy. Additionally, Onyx’s approach tackles political opposition by offering fossil fuel producers a powerful incentive to participate in decarbonization efforts. By receiving revenue from decommissioning fossil reserves, these producers become supportive stakeholders in the fight against climate change.
EOS credits specifically target the most carbon-intensive assets and aim to phase out the high carbon-intensive oil market. Without intervention, these assets would continue to produce and grow profitably for the next 10-15 years, which is a critical window for climate action. By using market mechanisms such as EOS carbon credits, an immediate and tangible impact at a gigaton scale can be achieved. The reduction in CO2e emissions annually depends on leakage rates, but it is estimated that phasing out the full high carbon-intensive oil market could reduce emissions by 0.2 – 1.1 gigatons.
The emergence of Onyx Transition comes at a time when the voluntary carbon market is facing scrutiny for the quality and reliability of carbon offsets. The introduction of the elimination credit represents a beacon of innovation and hope in this turbulent market. Unlike other credits, eliminating oil supply does not require technological advancement or have any supply chain limitations. It can be implemented immediately and deliver a gigaton-scale impact this decade, helping to avoid triggering catastrophic climate effects.
Onyx addresses the question of permanence, which has been a concern in the carbon credits market, through a three-pronged approach. They use legal, financial, and economic mechanisms to ensure that once a field is shut down, it remains permanently closed. As the market matures and buyers become more discerning, mechanisms that offer permanence, immediate impact, and robust protection against reversion risk, such as the elimination credits, are likely to become increasingly valuable.
Onyx Transition represents a paradigm shift in the carbon credits market by focusing on supply-side crediting and offering an attractive alternative to fossil fuel producers. By aligning economic incentives with ambitious climate action, Onyx provides a compelling solution to the challenge of reducing global carbon emissions. With its innovative approach and potential for significant impact, Onyx Transition offers hope in the fight against climate change.