LowEmissionAsphalt-136pg-WhitePaper-May2023

P a g e | 23 Auditing carbon removal efficacy (measurement, reporting, and verification or “MRV” ) of offset strategies and technologies has been the primary limiting factor to growth in the market despite growing needs-based demand . Alternative digital currencies, by comparison, are more speculative than needs- based and have failed to show they are uncorrelated to traditional investments, namely stocks and bonds. There also has been widely observed large scale fraud. So, we believe carbon ultimately will have a much larger market capitalization than digital currencies owing to its rising regulatory need (demand pull) and low correlation to equities (0.33); debt instruments (0.06); minerals (0.32); or gold (- 0.07). 45 Investing directly in green energy minerals, for example lithium, cobalt, nickel etcetera, are highly correlated strategies seeking very high risk, asymmetric returns and have no offset value. Carbon hence will be an incredibly unique type of “currency”. Table 1 – Top 4 Carbon Allowance Markets Performance Aug 2014-Dec 2022 (Weighted by volume) Carbon Allowance Equities Bonds Commodities Real Estate Annualized Return 25.1% 10.6% 1.1% -0.2% 5.4% Annualized Volatility 29.6% 15.6% 4.3% 23.8% 18.0% Source: IHS Markit As MRV takes critical importance now in the development of a carbon marketplace, the largest offset database built to date is at the University of California. The U.C. Berkely Voluntary Registry Offsets Database (VROD) , aggregates carbon management projects from the four largest voluntary offset project registries: • American Carbon Registry (ACR) • Climate Action Reserve (CAR) • Gold Standard (GS) • Verra (VCS) 45 IHS Markit: KraneShares: Is Carbon Poised for a Breakout Year in 2023 ?