A crypto that represents carbon credits

The Bob Pritchard Column 

Ben and Jerry’s, a company committed to cooling down global warming, is the first major retailer to create a carbon-credit system using blockchain tokens. The tokens can be traded on a distributed, open-source blockchain exchange run by start-up Stellar.

 

Ben and Jerry’s have built carbon credits into every scoop of ice cream purchased, a departure from existing carbon credits that are usually only sold in massive quantities to companies. Blockchain-based “micro-transactions” now make the same system possible for individuals.

 

 

Ben and Jerry’s will contribute a penny per cone to offset emissions. and offer customers the chance to donate a penny of their own. They hope to offer individual consumers an app to track their carbon offsets.

 

The blockchain ledger creates a more efficient and transparent method for exchanging the valuable certificates tied to reducing greenhouse gas emissions. YBlockchain, the electronic ledger technology underpinning bitcoin, has been used to address pollution and energy consumption in the past; now it is being used to attack global warming and deforestation.

 

Regulators are yet to determine what kind of instrument the tokens represent (i.e., a security or a commodity).  That will then inform who and how individuals and/or corporations are eligible to buy it.

 

The tokens will represent a portion of carbon credits, which are issued by governments under cap-and-trade programs set up over the past decade or so to limit the amount of carbon dioxide or other greenhouse gases companies emit. A carbon credit is equal to one metric tonne of carbon dioxide, so companies that emit fewer greenhouse gases and thereby underuse their allotted credits can trade them privately or on exchanges to others expecting to exceed their limit.  The purpose of cap-and-trade is to push companies to reduce their greenhouse gas emissions by "capping" the amount they can emit and allowing them to "trade" excess credits.

 

The process of calculating carbon emissions and trading credits, however, is a manual, time consuming and expensive process. Through the use of a permissioned blockchain, the use of fossil fuels could be tracked at the same time carbon credits are traded.

 

Deforestation – the clearing of forests and green areas – is responsible for more carbon emissions than the sum total of all cars and trucks on the road.  The purpose behind REDD+, which stands for Reducing Emissions from Deforestation and forest Degradation, is to make trading carbon credits more valuable to corporations than developing large swaths of rainforests -- typically by burning the trees.

 

A blockchain-based ledger that allows carbon credit data to be freely shared among corporations would go a long way toward reducing complexity. There is currently a lot of friction involved in trying to purchase them and use them to offset a carbon footprint.  The blockchain exchange will create trust through transparency in trading since anyone on the permissioned electronic ledger will be able to verify the carbon credits exchanged.