CONNECTIVITY CHOICES FOR REGISTRY WORKSHOP BUILDING REGISTRIES TO SUPPORT THE NEXT GENERATION OF CARBON MARKETS PARTNERSHIP FOR MARKET READINESS

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1 CONNECTIVITY CHOICES FOR REGISTRY WORKSHOP BUILDING REGISTRIES TO SUPPORT THE NEXT GENERATION OF CARBON MARKETS PARTNERSHIP FOR MARKET READINESS Zhang Xiaoguang Sinocarbon Innovation & Investment Co.,Ltd. September 25, 2015 Sacramento, CA

2 Outline Systems to be connected to a registry Connectivity architecture choices Connectivity protocol choices Security measures 2

3 Potential systems Third party platforms Trading System Auction platform Registry System Information source systems Emissions Report System Identity System Other Registry Systems 3

4 Objectives of connecting systems Registries Perform cross market transactions Reconciliations Third party platforms Perform cross platform carbon unit transfer transactions Reconciliations Information source systems Achieve information from information source systems 4

5 Outline Systems to be connected to a registry Connectivity architecture choices Connectivity protocol choices Security measures 5

6 Central hub based online connectivity 6

7 Peer to peer based connectivity 7

8 Offline connectivity 8

9 Comparison of connectivity architectures Implementation complexity Central Hub Peer to peer Offline High implementation complexity. Depends on the transaction rules to be implemented. Relatively low for implementing unified market rules. High implementation complexity. Depends on the transaction rules to be implemented. Relatively low for implementing multiple rules. Low implementation complexity. Performance Capable of processing automated transactions. Relatively low performance due to central hub bottle neck. Capable of processing automated transactions. Relatively high performance due to peer to peer processing. Not Capable of processing automated transactions. Low performance due to offline processing. Reliability Central hub failure will affect all the connected systems. Easy to ensure the reliability after updating central hub. Single peer failure will not affect the connected systems seriously. Difficult to ensure reliability after updating one peer. High reliability. Security Easy to apply unified security measures. Difficult to apply unified security measures. Vulnerable to information stealth. Maintenance cost Relatively low maintenance cost for connecting a large number of systems using single market rules. High maintenance cost for connecting a small number of systems. Depends on the connectivity of each peer. Low maintenance cost. Data consistency Easy to ensure data consistency with central hub based transaction log. Easy to ensure the unified transaction check rules. Difficult to ensure data consistency among peers. Difficult to ensure the unified transaction check rules without erros. Difficult to react to data changes of a connected system. 9

10 Implementation technologies Socket level technology Webservice based technology Implementation complexity High Low Performance High Low Reliability Difficult to ensure reliability. Easy to ensure reliability. Maintenance cost High Low 10

11 Outline Systems to be connected to a registry Connectivity architecture choices Connectivity protocol choices Security measures 11

12 Connecting registries - principles Specify the transactions. Specify accounting models and transaction workflows. Specify the carbon units involved. Specify the transaction check rules. Specify connection architecture. Specify data package formats. Specify data connection available rules. Specify security rules. Specify data transmission technology. 12

13 Connecting registries - Brief review of DES Available for processing most of the transactions in a carbon market. Unified accounting model and transaction workflows. Support Kyoto units, and EUA. Unified the transaction check rules. Central hub based protocol. Unified data package formats. (Serial number identifiers) 7X24 availability. Unified security requirements. SOAP based data transmission. 13

14 Connecting registries - Peer to peer protocol with mirroring approach System 1 Holding account Carbon unit cache account Data exchange interface Carbon unit information System 2 Holding account 14

15 Connecting registries - Reconciliation Validate account totals. Validate carbon unit blocks. Review transaction history logs. Manual intervention. 15

16 Connecting third party platforms Mirroring approach can be applied. Total validation level reconciliation. Total records be determined by the registry. Webservice based technology is applicable. Offline approach can be applied. 16

17 Connecting information source systems Specify information synchronization cycle. Specify information synchronization workflow. Specify data package format. Specify data update reaction scheme. Websevice based technology can be applied. Offline approach can be applied. 17

18 Outline Systems to be connected to a registry Connectivity architecture choices Connectivity protocol choices Security measures 18

19 Connection risks Online approach Data leakage Data tempering Data inconsistency Data loss Fraudulent transmission Offline approach Data leakage Data inconsistency 19

20 security measures Online approach Reliable workflow design Data encryption scheme Reconciliation VPN connection Point to point connection IP and port access constraint Dedicated connection sever Other network security devices Offline approach File encryption Data change react scheme 20

21 Thank You for Your Attention Zhang Xiaoguang Sinocarbon Innovation & Investment Co.,Ltd. For more information on the Partnership for Market Readiness, please contact: 21

Advance unedited version

Advance unedited version Decision _/CP.8 Technical standards for data exchange between registry systems under the Kyoto Protocol The Conference of the Parties, Recalling its decisions 15/CP.7, 16/CP.7, 17/CP.7, 18/CP.7, 19/CP.7