Carbon credits: With many corporations getting on the carbon credit bandwagon to offset their pollution, how can we know if these projects are legit? By verifying their promises using blockchain, says Sarah Baxendell, Director of Ecosystem, Regen Network.
Over the past few years, there has been an explosion of climate impact commitments from major corporations. Companies are looking to take responsibility for the greenhouse gas emissions of their business operations. One example is the Microsoft Moonshot goal. This focuses on the company becoming carbon negative by 2030 and removing its historical carbon emissions by 2050. The goal is met by Microsoft directly supporting carbon emission reduction and removal projects via carbon credits.
Carbon credits are designed to remove excesses of carbon dioxide to balance global temperatures. But also, carbon credits raise money for ecological restoration projects.
Carbon Credits: How it Works
Projects that regenerate land and remove carbon dioxide from the atmosphere can sell carbon credits. Individuals and businesses can purchase these credits and then retire them. This means they counteract the negative ecological impact of their business activities.
The existing system of carbon credits has been criticized in the past. There have been questions around their role in accounting. ‘Greenwashing’ is when companies use carbon credits to avoid reducing emissions. Plus, the ‘middleman’ carbon credit registries have often been accused of having poor standards. And there are questions around the quality of some ecological projects that sell the carbon credits.
If carbon credits are to play a major role in helping the world decarbonize, companies and individuals must use them responsibly.
Carbon Credits: Purchasing and retiring
Traditionally, carbon credits are purchased from brokers on a deal-to-deal basis. This leads to limited price transparency. Extra time and effort is needed to buy them. Market actors can turn huge profits, and money from carbon credit sales sometimes doesn’t end up in the hands of the communities regenerating land.
Carbon credits: Retirements are not transparent
Once purchased, carbon credits that are used to offset carbon footprints receive a proof of retirement. This is on a piece of paper or on a PDF certificate. The information is rarely made publicly available. Carbon offsets claims cannot be easily audited.
Carbon Credits: High project development fees
Extremely high project registration fees and other costs mean that only big players can afford to offer carbon credits. This can exclude local communities, indigenous populations, small properties, and small organizations from participating in carbon markets.
Legacy carbon registries have questionable standards
Centralized, institutional, legacy registries do not meet standards expected in other industries.
Carbon Credits: How can blockchain help?
Blockchain-based carbon and ecological asset registries can solve many of the legacy carbon market challenges.
-Blockchain technology provides direct access to the carbon credit market. This allows for more transparent pricing for project developers, land stewards, and credit buyers. How? By removing third-party brokers. Examples include blockchain-based carbon marketplaces like Regen Network, Earthbanc, and Moss.Earth.
-Blockchain allows for a wider variety of carbon credits to be marketed to corporate buyers. This includes new, innovative soil carbon credits, like CarbonPlus Grasslands.
-The immutable data trail of blockchains like Regen Ledger allow for both ecological impact claims. And, corporate carbon offset claims can be publicly audited by individuals, corporations, and governments. This ensures accurate, transparent global carbon accounting that fulfills the Paris Agreement.
-Web3 offers an open, public coordination tool. With it, communities can design and govern their own carbon crediting standards. This is evidenced by community-governed web3 credit origination systems, like Regen Registry.
-Blockchain carbon markets can be highly liquid. This allows for ease of purchase by volume for large corporate climate commitments and the development of new, innovative, yield bearing financial instruments.
Looking Forward to a Regenerative Future
The challenges of carbon offsetting are daunting. Innovations and market disruptions are needed to scale the climate impact industry and meet the urgency of the crisis.
Bringing carbon markets onto the blockchain has the potential to empower local communities. A Web3 native blockchain-based carbon market will allow anyone with access to a computer the ability to participate in a global carbon marketplace.
More efficient, liquid, and transparent carbon markets emerge on the blockchain. And more funding will make its way directly into the hands of the communities who steward our forests, rivers, oceans and fields. As the carbon dioxide concentration in our atmosphere continues to rise, there is no time to waste.
About the author
Sarah Baxendell is the Director of Ecosystem, Regen Network. Sarah is a social impact designer and carbon markets expert addressing climate change through place, product, and programs. As Director of Ecosystem, she has most recently spearheaded business development, brand, partnership and product strategy for Regen Network. Regen Network is an application-specific blockchain community for global carbon accounting and offsetting. She is the Co-Founder, Designer, and Founding Executive Director of Hilltop Urban Farm, the largest urban farm and first adult urban farm incubator in the USA. She led the public master plan design of 650+ acres of urban parks and vacant land within the City of Pittsburgh.
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