A blockchain platform to trade carbon offsets? By DailyCoin

• The International Finance Corp (IFC) is committed to greater efficiency and use of carbon projects.
• The World Bank’s affiliate launched the Carbon Opportunities Fund to provide emissions cuts through the blockchain.
• Only 10% of carbon credit projects currently meet the fund’s criteria.

A blockchain platform dedicated to trading carbon offsets will be able to attract a larger number of institutional investors to boost green projects in emerging markets, the International Finance Corp (IFC) told Reuters.

The organization, which is affiliated with the World Bank, was established in 1956. It promotes blockchain because it believes that this technology will be able to promote the use of carbon offsets to mitigate climate change better than the traditional methods used.

The blockchain is a shared ledger or decentralized digital database, which facilitates the recording of transactions and serves to track and trade any asset on the network.

Companies use the credits to compensate for the emissions they generate or the carbon footprint they represent. The level of greenhouse gases (GHG) is calculated through direct or indirect emissions from organisations.

To compensate for these emissions and reduce their impact on the environment, companies develop projects such as planting trees or supporting projects for the generation of clean energy (solar, wind, hydrogen).

Most of the carbon credit markets are not under regulation by the countries, because the governments have not yet agreed on the commercial rules. Fintech companies specializing in the tokenization of carbon offsets have been created in the past year.

On the other side

• However, this type of trading has had problems due to some fraud and manipulations discovered with the carbon credits being traded.
• Even the blockchain technology itself has been questioned due to the excessive energy consumption used in cryptocurrency mining.

The world’s leading carbon credit registry, Verra, is taking issue with tokenizing its retired carbon offsets. The organization said it will not allow that and is preparing to hold a consultation on the matter.

According to an IFC spokesperson quoted by Reuters, only unused carbon credits will be tokenized and sold, and they must be registered in advance and subject to additional quality checks.

Green Credit Joint Venture

For the creation of the Carbon Opportunities Fund that will trade carbon offsets on the blockchain, the IFC collaborated with two financial companies that support the reduction of emissions and the preservation of the environment.

In addition to Aspiration, which claims to be “100% committed to clean money,” Chia Network, a sustainable blockchain technology company, and Cultivo, a biodiversity investor, are participating.

The fund, which will start with an initial capital of $10 million, will buy carbon credits from projects previously selected by Aspiration and Cultivo. Chia’s technology will then be used to tokenize the credits that will be tracked through the World Bank’s Climate Warehouse program.

Verra has been in talks with the IFC to determine what role it will play in the Climate Store, a spokesperson for the organization said.

“It’s going to set a standard and a benchmark for the market that makes it more likely that other institutional capital will come in behind it,” said Steve Glickman, international president of Aspiration. According to Glickman, only 10% of carbon credit projects meet the criteria set by the fund.

Aspiration estimates that between 50 and 60 gigatons of carbon emissions need to be reduced each year, but only a third can be eliminated through the use of renewable energy sources and other effective measures.

By the end of this year, the IFC fund could buy between 250,000 and 300,000 tonnes with credits that have already been identified. In the meantime, it is evaluating other projects for around 1 million tonnes, which will be available in the coming months.

The platform’s transparency will make both companies and investors more appreciative of the environmental projects that support the offsets, said IFC Senior Investment Officer Bruce Keith.

“Why is a credit from Amazon (NASDAQ:) worth more or less than a credit from the Congo Basin? Or more or less than a credit from a forest in the southern United States? You (now) have the means to know,” Keith stated.

Why you should care

• The use of blockchain in this type of project, which is so important for the future of humanity, represents a recognition of this technology by the World Bank.

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