Update Serial Number Issuance (by block).

[zungundp]

Assign a unique serial number to each block to facilitate tracking and prevent overlap or duplication. Only publish the serial number for each block of credits after the block has been issued to ensure accuracy.

[zungundp]

What is a Carbon Credit?
Carbon credits are issued and verified by government registries or independent standards/registries such as Verra, Gold Standard, Climate Action Reserve, and the American Carbon Registry. Each verified carbon credit is issued with a unique serial number.
Source: https://www.iras.gov.sg/taxes/goods-services-tax-(gst)/specific-business-sectors/carbon-credits

When is a Carbon Credit created?
A carbon credit can only be issued, serialized, and recorded onto the ledger after the project has been implemented, monitored, and verified. Since credits may be issued multiple times for a single project, they are issued and recorded in batches. Each batch of credits receives a serial number that defines the block range, indicating the beginning and end of the credit allocation.

How is a Carbon Credit Serial Number formatted?
The existing UNDP Serial Number format is mostly correct but requires a few modifications:

• Project ID: Should allow up to four digits (XXXX) instead of the current three-digit (XXX) format to accommodate more than 999 projects per country.
• Year → Vintage: This terminology is more consistent with how UNFCC and others write it. Clarifies that this represents the year the emission reduction/removal occurred.
• Blank/Any Other → Batch: Rather than using a blank or zero, this field will indicate the batch of issuance.

So the new format should be:

When serial number is issued
In the UNDP demo system, we need to change when the serial number is created and written onto the ledger.

1) When a project is authorised.

• A Project ID should be created and written onto the ledger. At this point we can issue a partial serial number that includes Country Code + Type of Credit + Sectoral Code + Project ID Example: VU-ITMO-11-0356
• At this stage, the vintage, batch, and serial number block start/end are not created since the project has not been verified.
• We may note an estimation that 5000 credits will be created but we cannot create/record the serial number yet.
• At this stage, accounting should reflect a total of 0 credits associated with this project.

2. Implementation Phase / Credit issuance:
Each time a project undergoes monitoring and verification, a batch of credits is issued:

• Example 1: In January 2024, Batch 1 with 3,000 credits is issued. Serial Number: VU-ITMO-11-0356-2024-1-1-3000
• Example 2: In January 2025, Batch 2 with 2,000 credits is issued. Serial Number: VU-ITMO-11-0356-2025-2-3001-5000
• At this stage, accounting should reflect a total of 5,000 credits issued and be linked to the 2 unique serial numbers above for each batch.

3. Credit transfer and retirement:
When credits are transferred, the exact batch must be recorded and referenced.

• Example: In August, Batch 1 (VU-ITMO-11-0356-2024-1-1-3000) is transferred and retired.
• Remaining Active Credits: Batch 2 (VU-ITMO-11-0356-2025-2-3001-5000) remains in the account.
• At this stage, accounting should reflect a total of 2,000 credits in the account and be linked to the Batch 2 serial number above.

Inspiration source: https://www.climateactionreserve.org/how/program-resources/serial-number-guide/

@sapumalxep @palindaa

[palindaa]

@zungundp

How should we handle a situation where the credit owner (Org A) transfers part of a created block?
Based on the example above:

• Transfer 2,500 credits to another organization (Org B) using the Batch 1 instead of retiring.

In this case, do we need to update the existing serial number (VU-ITMO-11-0356-2024-1-1-3000) of the block?

For instance:

• Org A's remaining block serial number:

  • VU-ITMO-11-0356-2024-1-1-500 or VU-ITMO-11-0356-2024-1-1-3000-1-500

• Org B's new block serial number:

  • VU-ITMO-11-0356-2024-1-501-3000 or VU-ITMO-11-0356-2024-1-1-3000-501-3000

Would this be the correct approach?

[zungundp]

@palindaa my understanding is the 1st option is correct? But I'm going to just copy this entire thread out into a word document to share with stakeholders for review.