As part of Conviction’s #CryptoClimate series, including our Q&A with JustCarbon, contributor Gavin W H Anderson, JustCarbon dispels blockchain myths in carbon credits, markets and offsetting. Blockchain can simplify the marketplace, increase transparency and have a planet-positive impact, Gavin writes. But net-zero isn’t enough without more ambitious carbon projects.
The imperative of net-zero carbon emissions for the planet is clear. But the evidence is stacking up even more ambitious goals to fight climate change are required to meet net-zero and reverse the effects of human activity - where net-zero stops short despite what we’re already seeing today.
Turning back the clock on the climate crisis requires the sequestration of historic atmospheric carbon to return to pre-industrial levels. One of nature’s best solutions is mass tree planting, but this will only go so far. The world needs more ambitious projects for nature-based carbon-sequestering.
The clear message from the UN’s report from the third working group of the IPCC, Mitigation of Climate Change is that CO2 removal is essential. While carbon credits can provide finance for removal projects in development, at scale and globally, the potential of blockchain is to accelerate positive impact.
“Turning back the clock on the climate crisis requires the sequestration of historic atmospheric carbon to return to pre-industrial levels... The world needs more ambitious projects for nature-based carbon-sequestering.”
Crypto & carbon credits
The entire crypto world can seem impenetrable to those yet to dabble in the markets, who are unfamiliar with the myriad of new terms or are simply confounded by the volatility of Bitcoin. But suppose we take away the hype, the complexity of trading and investing for returns in crypto-currencies, and instead look at how a carbon credit marketplace can harness the benefits of crypto trading on the blockchain.
Carbon credits are essentially a digital asset and blockchain is the best way to manage a digital asset, efficiently, without sacrificing integrity. Previously, carbon credits were niche, requiring specialist knowledge to buy in the disparate and fragmented marketplace. Demand is strong regardless and the voluntary carbon market is a rapidly growing one, with estimates from BloombergNEF the cap could reach £550 billion by 2050.
Merging the utility of blockchain with the climate benefits of carbon credits simplifies finance for projects to offset carbon footprints and, crucially, break ground on more ambitious carbon sequestration projects that will help get us to and beyond net-zero.
Blockchain can enable a future proof, circular economy. Done correctly, that is, because like CarbonPlan’s recent report concludes, any scheme is only planet-positive insofar as the “credits on which it is founded.”
“Suppose we take away the hype, the complexity of trading and investing for returns in crypto-currencies, and instead look at how a carbon credit marketplace can harness the benefits of crypto trading on the blockchain.”
Harnessing crypto’s potential
Governed by common ownership and democratised control, DAO is a ‘decentralised autonomous organisation’ where every participant has a vested interest in the market's integrity. Increasingly present across blockchain solutions, the DAO structure of JustCarbon’s platform will harness the strengths of the ‘owned by no-one’ model, applied to carbon credits in order to bolster the market, specifically the vertical for voluntary offsets.
DAO is bringing the ‘murky’ world of crypto into the mainstream. DAO ensures transparency, where financial transactions and rules are publicly recorded on the blockchain. Regulators and financial institutions are taking note, most recently, with the UK government’s announcement of a new sandbox programme for innovation, DAO and DeFi to re-energise financial markets.
The potential of DAO is democratic - the collective ownership and control of markets previously dominated by more conventional, hierarchical structures and concentrated pools of assets. There are few markets like carbon credits, which has an acute need for trust, integrity and transparency sorely lacking today, no less urgent as the climate crisis increases demand for new offsets.
But the fate of the planet rests with collective action in the global community - no single organisation, government or multinational conglomerate can dictate how the climate crisis ends. As part of the global solution, the carbon market cannot be a profit playground for a few intermediaries, brokers and retailers looking to get rich quick while climate-critical projects struggle for funding.
“There are few markets like carbon credits, which has an acute need for trust, integrity and transparency sorely lacking today, no less urgent as the climate crisis increases demand for new offsets.”
JustCarbon’s plan for the future
Built to address contradictions in the carbon marketplace today, JustCarbon aims to facilitate global action, financing and offsetting projects that have real value in the fight against climate change. Blockchain has real potential to enhance offsetting, but like any carbon credits, real impact is only achieved through the highest quality nature-based carbon sequestration projects.
JustCarbon is a platform for those assets, purpose-built for project developers and buyers to transact with transparent, straightforward solutions to fund carbon removal. As a marketplace, JustCarbon fulfils demand from many buyers - whether crypto traders or individuals and small and medium-sized businesses looking to offset their carbon - supporting nature-based projects that add new sequestration capacity to the planet’s ecosystems.
Each JustCarbon tokenised carbon credit, ‘JCR’ backs the equivalent removal of 1 tonne of carbon from the atmosphere. The underlying asset is, importantly, high quality and minted after 2016 – Verified by Verra or Gold Standard.
“Blockchain has real potential to enhance offsetting, but like any carbon credits, real impact is only achieved through the highest quality nature-based carbon sequestration projects.”
Scrutiny ensures quality, not broad brushstrokes
While recent reports suggest some marketplaces have given ‘low-quality credits new life’ Gold Standard credits originate post-2016, a critical cutoff under international agreements. Each credit reserves 20 per cent of emissions to cover unforeseen loss in the carbon offset, an insurance policy that ensures projects that underperform, are impacted by natural disasters or anything that devalues the positive planetary worth of a carbon credit is fully accounted for.
Although traditional carbon markets currently dwarf the voluntary carbon market, continued growth relies on accountability to maintain the trust of buyers. Direct access to projects, cutting out rent-seeking brokers and intermediaries, is how JustCarbon proposes to enable critical projects to directly access financing.
“Although traditional carbon markets currently dwarf the voluntary carbon market, continued growth relies on accountability to maintain the trust of buyers.”
DAO, crypto, blockchain, fundamentally the promise of these technologies is to introduce efficiency and transparency in carbon credits, minimising costs and building trust that will fund ambitious nature-based carbon-sequestering projects, getting us to net-zero and lower.
Yet, a collective understanding of how blockchain adds real value and offers quality assurance in the carbon marketplace is essential to get there at a critical moment for the planet.
Gavin W H Anderson, Brand and UX at JustCarbon
Brand and UX lead at JustCarbon since September 2021, Gavin W H Anderson is a speaker, strategy and brand expert that has worked on go-to-market with global brands, including Apple-Newton, Microsoft-Office and Lotus-Notes. Currently, Gavin holds several director and advisory roles in addition to JustCarbon and is a writer and investor in AI/ML.