Rewards Distribution Policy

Version 1.0 (Ratified on Jan 22, 2024)

This document identifies Carrot’s policy for distributing rewards among waste supply chain participants, determined by category, from Recycling Credits (TRC) and Carbon Credit (TCC) sales. The primary goal of the Rewards Distribution Policy is to designate rewards in a manner that encourages maximum participation in the network and helps to grow recycling and reuse rates rapidly in each geography. The Rewards Distribution Policy have been established by the Carrot Foundation in consultation with market participants, advisors, and data scientists. In time, these decisions will be transferred to local communities. For a deeper analysis, we invite participants to read the section in the white paper titled Distribution Model.

Participant Key

• Waste Generator = G

• Bin Custodian = B

• Hauler(s) = H

• Processor(s) = P

• Recycler = R (All recyclers are also Ps)

• Ecosystem Builders = E

  • I = Network Integrator (Data Provider for Supply Chain Tracking and Circular Activities)

  • A = Methodology Author

  • D = Methodology Developer and Distributor

  • N = Carrot Network

[Note: Carrot Network covers costs related to homologation, audits, verification, certification, issuance of credits, registry, and data processing. Administrative costs of similar carbon credit projects range between 30-50% for project development and certification, not factoring in additional costs incurred by the buyers (of the credit) who conducts their own verification activities. Such costs can represent 200-300% of the cost of each credit, meaning that proceeds from the sale of credits can represent less than ⅕ of the total cost of a credit. Carrot's dMRV (digital Measurement, Reporting and Verification) solution delivers a transparent trusted solution that is low-cost returns as much value as possible to the market participants who are performing important environmental work in the field. At scale, Network fees can be reduced significantly distributing even more value to participants.]

Rewards Distribution Discounts

• Supply Chain Digitization Incentive Mechanism: a standard discount of 25% in rewards will be applied to all logistics and service providers (Recyclers, Processors, and Haulers) when the Waste Generator is not identified. The discount is for all waste types and all geographies, serving as an incentive mechanism for further supply chain digitization. More information can be found at Waste Generator Not Identified and Reaching the Source of Waste Creation.

• "Large Revenue" Business Discounts: a standard discount of 50% in rewards will be applied to Waste Generators that record more than US$4 million in revenues in the prior calendar year. Country- or region-specific thresholds may be set to simplify the verification process and will be applied if listed below. The discounted rewards will be stored in a digital wallet managed by the Carrot Fndn and to be donated to homologated NGOs dedicated to advancing the circular economy in the country where the recycling took place. Discounted rewards to large (waste-generating) businesses serve to appease discomfort for credit buyers seeing rewards flow to large organizations while still providing enough of an incentive for large Waste Generator businesses to participate in the ecosystem and be incentivized to contract performant recycling, composting, and/or reuse services.

  • Country-specific criteria:

    • Brazil: a Large Waste Generator business is any organization that the Brazil Tax Authority (Receita Federal) identifies as "Group I Large Business" or "Group II Large Business" (Empresa de Grande Porte).

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REWARDS DISTRIBUTION BY WASTE TYPE

Note that percentages distributed to Ecosystem participants have not been determined yet, as discussions are ongoing with Participants in order to determine the optimal distribution for this stage of market development.

ORGANICS

• Composting of Mixed Organic Waste

  • Distribution: G (30%), H (10%), P (10%), R (20%), I (8%), A (1%), D (1%), and N (20%)

  • [Note: The Waste Generator typically bears the high cost of contracting composting services (known as pay-as-you-throw), which often competes with free street pickup from traditional waste-to-landfill management systems. Composters R) sometimes also perform hauling services.]

• Composting of Sludge from Waste Treatment Plants

  • Distribution: G (25%), H (5%), P (10%), R (30%), I (8%), A (1%), D (1%), and N (20%)

• Composting of Tobacco Industry Residues:

  • Distribution: G (25%), H (5%), P (10%), R (30%), I (8%), A (1%), D (1%), and N (20%)

PAPER & CARDBOARD

• Paper & Cardboard Recycling

  • Distribution: G (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)

  • [Note: Paper & Cardboard typically have well established supply chains.)

METALS

• Aluminum

  • Distribution: G (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)

• Steel

  • Distribution: G (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)

GLASS

• Cullet Recycled at a Bottling Plant

  • Distribution: G (25%), H (10%), P (20%), R (15%), I (8%), A (1%), D (1%), and N (20%)

  • [Note: Waste Generators usually do not have to pay much for dedicated glass pickup.] Glass recyclers benefit greatly from increased cullet volumes, both in terms of pricing and energy efficiency within furnaces. Haulers and Processors usually need to invest heavily in bins and truck infrastructure and resale value of materials is typically low.]

PLASTICS

• PET Recycling

  • Distribution: G (25%), H (15%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)