---
title: a credit judged as money
canonical_url: https://ensurance.app/guide/a-credit-judged-as-money
markdown_url: https://ensurance.app/guide/a-credit-judged-as-money.md
subtitle: "liquidity, fungibility, exchangeability, composability — the scorecard every unit should have to pass"
category: nature-finance
---

# a credit judged as money

*liquidity, fungibility, exchangeability, composability — the scorecard every unit should have to pass*

No. **Carbon credits are not fungible**, and they were never designed to be. Two credits that each stand for one tonne of carbon dioxide are still two different things to a buyer, because each carries its own project, its own vintage, its own methodology and, more and more often, its own rating. A buyer who asks *which* tonne is doing ordinary diligence. The answer changes the price.

A mangrove forest on a tidal coast traps silt, breaks storm surge, feeds a fishery and stores carbon in its mud, whether or not anyone issues a credit for it. Someone has to pay that coast, and pay the people who keep it. Every credit is one attempt to do that job. [*ensurance*](https://ensurance.app/?from=guide) is another: it funds the condition of places like that coast. It is not the mangroves.

:::johnson
**a credit is a currency that cannot circulate, cannot be split, and dies the moment it is used.**

That is not a flaw in the people who built it. It is the shape of an instrument made to be retired once, by one buyer, against one claim.

[how the carbon market is put together →](/guide/what-a-carbon-market-actually-is?from=guide)
:::

## are carbon credits fungible

### are carbon credits fungible?

**Fungible** means any one unit can stand in for any other of the same kind, and nobody cares which one they got. A dollar is fungible. A carbon credit is not. A mangrove restoration and a landfill gas flare are different **projects** with different risks. The **vintage** is a year many buyers screen on. The **methodology** is a rulebook, and rulebooks get revised. The **rating** grades how likely the tonne is real and lasting.

On 5 October 2026, Carbon Pulse reported a rating agency's finding that the value of retired credits rose in the third quarter while volumes fell, and that the premium buyers pay for higher-rated credits widened. That is a market doing its homework.

It is also **price dispersion**: the same nominal tonne fetching different prices depending on which tonne it is. Dispersion is the opposite of fungibility. A quality premium is the market saying, in its own numbers, that a tonne is not a tonne.

You might be thinking that the atmosphere does not care which tonne. Fair. The buyer does, because the buyer is not buying the tonne. The buyer is buying a claim that the tonne happened, and claims differ in how well they hold up.

### the fair exception: allowances

An **allowance** in a compliance cap-and-trade scheme, such as the EU Emissions Trading System, is fungible, because a statute says one allowance in that scheme is the same as any other and the regulator accepts any of them at surrender. That legal sameness is why compliance markets have depth: a trader never has to ask where the unit came from. The voluntary market has no statute doing that work.

## the scorecard

If credits are pitched as money, score them as money: the classical functions first, then the primitives a trader or a builder checks next. Each column is scored as the instrument is **designed**, not as a dunk. Our two columns are on the right, and two of their rows are weak.

| primitive | in plain words | carbon credit | biodiversity credit / BNG unit | allowance | dollar / stablecoin | ensurance coin | ensurance certificate |
|---|---|---|---|---|---|---|---|
| **Medium of exchange** | Can I pay with it? | No; it is retired, not spent | No | Within the scheme | Yes | Yes, in its pool | No, by design |
| **Unit of account** | Can I price things in it? | No | No | Tonnes, yes | Yes | No | No |
| **Store of value** | Will it hold its value? | Vintages age, prices disperse | Tied to one site | Policy risk | Yes | Volatile | Holds the record, not a price |
| **Liquidity** | Can I exit without moving the price? | Thin; issuance and retirement are most of it | Near none | Deep | Deepest | Small pools; the protocol is its own first user | Thin secondary market |
| **Fungibility** | Is one unit the same as another? | No: project, vintage, rating | No, by design | Yes, by statute | Yes | Yes, within one coin | No; one certificate, one agent, by design |
| **Divisibility** | Can I pay a fraction? | One tonne | One unit | One tonne | Cents | 18 decimal places | Whole units |
| **Exchangeability** | Is there a venue and a buyer? | Brokers, over the counter, exchanges for a slice | Brokered | Exchanges | Everywhere | A public pool | A public market, thin |
| **Composability** | Can others build on it without asking? | No; it lives in a registry account | No | No | Partly; stablecoins yes | Yes; open contracts | Yes; open contracts |
| **Modularity** | Can one part be swapped alone? | No; methodology, registry, verifier bound together | No | No | Not applicable | Yes; pool, payout and agent are separate parts | Yes |
| **Decentralization** | Who can stop issuance or transfer? | The registry | The regulator | The regulator | The issuer and the banks | No single party after deploy; a person confirms each action today | Same as the coin |
| **Programmability** | Can the money carry rules? | Article 6.4 units: a levy by committee, 5% to adaptation, 2% cancelled | No | No | On some rails | Proceeds splits, streams, payout recipients | Payout to the agent's account |
| **Verifiability** | Can anyone check it cheaply? | A serial number in a registry | A registry | A registry | A bank statement | A public ledger | A public ledger |

Read down the carbon credit column and most answers are no. A credit is a receipt with a serial number, made to prove that one tonne was counted by one buyer. It does that job. It was not asked to be money.

## why there is almost no middle

### why do carbon credits have no liquid secondary market?

AlliedOffsets' count for the first half of 2026, as the trade press reported it, put issuances and retirements within a few million credits of each other, with issuance down sharply from a year earlier and retirements slightly up. Inside that retirement figure is one buyer, Hess, retiring 12.5 million Guyana REDD+ credits in May, a large share of the half-year in a single retirement.

Units come in at one end and leave at the other in nearly the same quantity. Issuance and retirement are nearly the whole market. The middle, where money lives, is thin: the stretch where a unit is held, priced against other things, pooled, spent and spent again.

You might object that brokers trade credits every day. They do, and the work is real. But nearly every trade is a step toward a retirement. When the last buyer counts the tonne, the unit stops. A dollar that stopped every time it was used would have no secondary market either.

Retirement is the product working, not failing. For what a carbon credit is at bottom, read [a carbon credit is not a wet peatland](/guide/a-carbon-credit-is-not-a-wet-peatland?from=guide); for the carbon offset and its biodiversity copy, [the carbon template biodiversity is copying](/guide/the-carbon-template-biodiversity-is-copying?from=guide). BNG units sit further along the same line: one site, bought once to meet one condition.

## the three rows that decide it

Most of the financial world is made of claims. A credit is a claim: a tonne someone may count. A dollar is a claim on its issuer. A bond is debt. A share is equity. A mortgage makes a house collateral. That is how most money works. Our rule for money meant for living systems is different: it is based on the living asset itself, its condition and its function, and it is none of those. Three rows test it.

| row | in plain words | carbon credit | biodiversity credit / BNG unit | allowance | dollar / stablecoin | ensurance coin | ensurance certificate |
|---|---|---|---|---|---|---|---|
| **What it is** | A claim, or something based on the asset? | A claim: a tonne someone may count | A claim: a unit a permit requires | A claim: a right to emit | A claim on the issuer | Currency based on the living system through its agent; no claim on it | A record of a hold on a named agent; no claim on it |
| **Debt, security or collateral?** | Can the place or issuer be made to pay, or be seized? | None of the three; a claim that gets retired | None; a permit unit | None; a legal right | Debt of the issuer, a liability on its books | None, by design | None, by design |
| **What it can call** | If someone redeems it, what gets claimed? | Nothing; it is the claim | Nothing | Nothing | The issuer's reserves | The pool, never the land | Nothing on the land, by design |

A credit calls nothing because it is the claim. A dollar calls its issuer's reserves. The last two columns call nothing on the place. A unit backed by a forest can be called on the forest; money based on a forest keeps the forest off the table. That argument lives in [living money](/guide/living-money?from=guide) and [a carbon currency is not a forest](/guide/a-carbon-currency-is-not-a-forest?from=guide).

### what a certificate is, and what it is not

A **certificate** is a record of a hold on a named agent, one to one. The **agent** is the address of a living system: the account where money for that place lands. The record sits on a public ledger anyone can read.

It is not title to the land. It is not a lien. It is not a share in the agent or in the place, and it pays no yield on the land. Holding one does not let you call the mangroves, the mud or the fishery. The **coin** is currency: it circulates in a public pool where one exists, and the only thing it can meet is that pool. [Form follows function](/guide/form-follows-function-the-agent-the-certificate-and-the-coin?from=guide) explains why these are three shapes, not one.

## where our column is weak

The ensurance columns pass rows a credit is built to fail. They also fail the two rows a trader checks first.

**Liquidity is small.** About half the coins have a [public pool](https://ensurance.app/pools?from=guide), the pools are small, and the protocol is its own first user. [What protocol owned liquidity can and cannot buy](/guide/what-protocol-owned-liquidity-can-and-cannot-buy?from=guide) sets out what an owned market does and does not fix.

**Store of value is weak.** Coin prices are volatile. A certificate holds a record, not a price, and its secondary market is thin.

Score us low on those rows. The claim is the shape of the instrument, not the depth of the book.

## what it would take

### what would it take for a nature credit to work like money?

It would have to pass the rows a credit is built to fail: units that are truly interchangeable, a fraction smaller than one tonne, a way to hold it without a clock running toward retirement, a venue where buyers and sellers meet more than once, parts others can build on without asking, and an answer to the last row that never reaches the land.

Our bet, stated plainly: we think this work ends up as money and a financial system based on the living condition of the Earth. Not because credits fail. Compliance markets will keep pricing a tonne, and a retired credit will stay an honest receipt. Because passing those rows is what the people building credits keep trying to do.

If you hold units, ask which rows they pass. If none, you hold a receipt, not money. That is fine. It is not what the pitch said.

Next: [a registry is not a market](/guide/a-registry-is-not-a-market?from=guide), on why a serial number cannot compose, and [money that acts like nature](/guide/money-that-acts-like-nature?from=guide), on how money based on a living system behaves. To run the scorecard against your own book, [start here](/solutions/investors?from=guide&topic=money-that-acts-like-nature).

The mangroves hold the coast whether or not a credit trades. Ask any unit that claims to pay them which rows it passes, and what it can call.

## sources

[Carbon Pulse — carbon credit retirement value rises as volumes fall, quality premium widens](https://carbon-pulse.com/557131/) — rating agency findings on Q3 2026, published 5 October 2026

[CarbonCredits.com — AlliedOffsets first-half 2026 market data](https://carboncredits.com/?p=45458) — issuances and retirements nearly in balance in H1 2026, including the Hess retirement

[Carbon Pulse — voluntary carbon credit issuances, retirements balance in H1 2026](https://carbon-pulse.com/539570/) — coverage of the same first-half balance

[UNFCCC — overview of Article 6.4](https://unfccc.int/sites/default/files/resource/Webinar%20II_2023-08-23_Overview%20of%20Article%206.4.pdf) — the 5% share of proceeds and 2% cancellation on issued units

[Carbon Market Institute — Article 6.4 factsheet](https://carbonmarketinstitute.org/app/uploads/2024/12/Article-6.4-Factsheet.pdf) — the automatic 2% cancellation

## the series

[every credit is trying to become money](/guide/every-credit-is-trying-to-become-money?from=guide) — the pillar

[a credit judged as money](/guide/a-credit-judged-as-money?from=guide) — this post

[a registry is not a market](/guide/a-registry-is-not-a-market?from=guide)

[money that acts like nature](/guide/money-that-acts-like-nature?from=guide)

[composable, modular, open](/guide/composable-modular-and-open?from=guide)

[pay the land, pay the people](/guide/pay-the-land-pay-the-people?from=guide) — the flag