Can Blockchain Tech battle Carbon offsets?

By April 15, 2022April 17th, 20228 minute read
Can Blockchain Tech battle Carbon offsets?
Note: This blog is written by an external blogger. The views and opinions expressed within this post belong solely to the author.

Climate change is a hot-button issue in conservation circles, but crypto carbon credits are being touted as a solution by an increasing number of cryptocurrency enthusiasts. From Procter & Gamble (PG) to Nestlé (NSRGY), firms are pledging to become “carbon neutral” by preventing as much carbon from entering the environment as they release.

Carbon credits are certificates signifying carbon dioxide that has been kept out of the atmosphere by some act of conservation or removal. As a practical solution to the world’s climate woes, some advocate for the use of carbon credits, while others argue that they make the situation worse by allowing polluters to spew more than they otherwise would.

Still, a new wave of crypto ventures is embracing carbon credits, with leaf-green logos and beautiful Amazon rainforest websites. These projects claim that on-chain carbon credits will boost transparency and access to the carbon credit market.

The regenerative finance, or ReFi, movement in crypto includes a wide range of voices, from carbon industry veterans and environmentalists to retail investors and accountants, with nearly everyone expressing a different position on how – and to what degree – blockchain may be utilized to tackle the defining challenge of our time.

Carbon offsetting, Carbon Credits: What are they?

Carbon offset programs enable individuals and businesses to invest in environmental initiatives across the globe to offset their own carbon footprints. The majority of these initiatives are located in developing nations with the goal of reducing emissions in the future. This may entail the implementation of renewable energy technology or the acquisition and subsequent use of carbon credits obtained through an emissions trading system. Other concepts use plants to absorb CO2 from the air directly. 

Carbon credits are issued by private and non-profit organizations for initiatives that reduce carbon emissions. Companies can vow to become carbon-neutral, for example, by purchasing pollution-reduction credits from another firm in a specific year. Each credit equals one tonne of CO2 emissions saved.

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Because current market standards are vague and there is little monitoring, proponents of crypto hope carbon offsets bring better transparency to the process.

In order to make up for the emissions they cause, firms purchase credits obligating them to take part in carbon reduction initiatives. Carbon credits are exchanged on the informal market at variable values depending on the carbon-removal effectiveness and the amount of activity of the project.

Environmentalists have been critical of the cryptocurrency sector because of the climatic impact of the industry’s power-intensive crypto mining. Following China’s crackdown on cryptocurrency mining and trade, the majority of Bitcoin miners were forced to relocate to other nations. Kazakhstan, a country that relies heavily on fossil fuels but offers cheaper electricity, was the preferred destination for a substantial portion of the migrants. This results in more emissions from crypto mining at a time when the world is moving towards green energy.

How is Blockchain playing a significant role?

Carbon credits may now be tracked and verified using blockchain technology. If they haven’t already, companies, governments, and people seeking greater transparency in carbon credit transactions will almost certainly turn to blockchain technology in the near future.

A number of developers have built their own blockchains, particularly to facilitate multi-party collaboration in the environmental and sustainability sectors.

Devvio

DEVVIO is a more environmentally-friendly cryptocurrency that consumes less energy than Bitcoin. A recent third-party review measured Devvio’s performance against ISO standards as part of a life cycle assessment (LCA). According to preliminary research, the DevvX blockchain consumes 3.5 billion times less energy per transaction than Bitcoin. By 2022, Devvio hopes to provide the final report.

Devvio was created in part to support the carbon credit market and sustainability projects. Devvio is already working with Avnet and Panduit to accomplish this objective. It is through the efforts of these groups that firms seeking carbon neutral status are able to link with groups that are creating carbon credits through tree planting and renewable energy infrastructure projects.

Earlier this year, Devvio also introduced a new ESG platform for municipalities. Cities and towns throughout the world may now measure “Scope 3” emissions produced by their network of vendors and suppliers thanks to the DevvESG product suite. The DevvESG suite was chosen by United Cities North America (UCNA) to be used by member cities in Mexico, Canada, and the United States to pursue Sustainable Development Goal initiatives.

Algorand

Algorand is another blockchain with low power consumption that facilitates smart contracts and environmental initiatives. In addition to becoming carbon negative, this blockchain has pledged to offset all of its own emissions and then some more. ClimateTrade, which keeps track of carbon emissions, partnered with Algorand in April 2021 to help the company become carbon neutral. ClimateTrade is also making it easy for businesses all across the world to measure their carbon emissions and offsets by working with Algorand.

Algorand’s method assesses the chain’s carbon footprint by counting the number of blocks in a row. With this, the network may calculate the Algorand Standard Asset (ASA), a metric unit of carbon credit equivalent. As a result, Algorand will be able to offset and secure the carbon footprint of the protocol.

NFTs for carbon credits

As with NFTs, carbon credits may one day have the ability to be generated and sold safely on a blockchain. In addition, a blockchain may be able to validate external carbon credit certificates as well, depending on the architecture. This is the goal of two brand-new initiatives, one of which is already underway.

Treedefi and Save Planet Earth (SPE) are making waves in the blockchain sustainability area, although they’re less well-known than Devvio and Algorand.

Treedefi

There is no independent blockchain for Treedefi but rather a token that can be traded on the Binance exchange. The project aims to create a development platform and plant trees with the money raised from it. Treedefi will then offer these as NFTs (non-fungible tokens), or, as Treedefi calls them, “nftrees”, in representational form. Treedefi claims that a third of transaction fees will be used to plant trees.

To purchase and sell NFTrees on Treedefi, you may use a fun dashboard to see how much carbon each tree is storing. The CO2 tokens that a tree produces may be used to offset your own carbon emissions. Companies looking to offset their carbon emissions can buy these tokens from you. Trees’ locations, planting dates, and other identifying information may be tracked and verified through a secure carbon credit trading space.

Save Planet Earth (SPE / SPEC)

Another cryptocurrency with even loftier goals than Treedefi is Save Planet Earth. The team behind this project has a broad spectrum of green technology experience. As part of its efforts to mitigate climate change, SPE aims to plant 1 billion trees. Soil regeneration, water recycling, renewable energy, and improved maritime climate management are all part of this effort, as are afforestation and reforestation.

Save Planet Earth (SPE) plans to establish a carbon credit market. Companies and individuals that want to offset their carbon emissions will use $SPE as an investment token. In addition to selling verified carbon credits, the company plans to generate money from a variety of other sources, including merch manufactured from plastic collected during beach clean-ups, tree products, and other unspecified activities.

The SPE project appears to be a huge undertaking. So, for example, SPE is working on its own software to track the amount of green canopy on its project sites using drones.

SPE Chain and Carbon Credit Exchange (SPEX)

SPE’s long-term goal is to create a carbon-negative version of the SPE Chain (SPEC). International money transfers will be made more affordable and environmentally friendly thanks to this network’s ability to verify carbon credit offsets. As with many SPE projects, this one is in its infancy.

The concept is to have two distinct levels of trading, with each carbon credit representing one ton of carbon emissions mitigated. An online store where carbon credits may be purchased with $SPE is the first step toward SPE’s role as a broker of carbon credits. Investors can buy and sell carbon credits at their own price in an open market provided by SPE. Carbon credits are assumed to rise in price over time under this scheme. SPE also intends to generate dividends from real-world renewable infrastructure projects for every dollar invested in $SPE.

For now, the SPE blockchain is being developed by Phantasma, which provides carbon-neutral Smart NFTs as an alternative. Phantasma will deploy SPE Carbon Credit NFTs as part of the agreement to achieve carbon neutrality. It is hoped that Phantasma will attract blockchain developers who are interested in creating applications on a sustainable ledger. Using Phantasma, SPE has had its CCNFTs available since November of 2021.

In what other ways may blockchains help the environment?

Blockchain technology is rapidly being used by businesses to improve their environmental footprint. Using blockchain-based software, for example, can provide a more efficient and less wasteful approach to managing supply chains.

Using the blockchain to keep track of raw materials might help organizations simplify their production operations. In certain circumstances, this minimizes the amount of energy and resources that are squandered when equipment or whole factories are idle.

There are certain companies who see the value in using the blockchain for zero-waste production and the circular economy as well. It is now easier for businesses to track and use their resources. They can also more regularly reuse or recycle materials, reducing the amount of waste generated.

Sustainability certificates may also be tracked and verified using blockchain technology. GOTS, Oeko-Tex, BlueSign, and Fair Trade certifications are just a few of my favorites among them. Similar to carbon credits, blockchains may be used to verify that a source or substance is authentic.

Blockchains and power grids

Renewable energy sources may now be tracked and distributed with the use of blockchains. The output unpredictability of renewable energy sources like wind and solar is a significant cause of worry. Unpredictability in energy usage also makes it difficult for a power grid to supply energy demands reliably.

The use of blockchain technology makes it much easier for these highly complicated networks to match energy output with demand. This might reduce the likelihood of blackouts and brownouts, as well as the requirement for significant contingencies by simplifying renewable energy networks. More efficient systems often result in cheaper costs, which makes renewables more appealing.

Final thoughts on blockchains and sustainability

Both the blockchain and crypto industry and sustainability efforts are experiencing phenomenal growth right now. Blockchain technology can make it easier and more cost-effective for enterprises to provide goods and services in a more environmentally and ethically responsible manner.

From fundamental tasks like offsetting carbon linked with shipping to more complicated measures like tracking a complete supply chain’s greenhouse gas emissions, blockchains provide a safe, trustworthy, and verifiable alternative. I believe that in the future, blockchain verification for GOTS and other certificates will become the norm. Companies may also use blockchains to provide transparent environmental reports that display a log of carbon emissions and credits.

There is a lot of room for improvement in the sustainability arena for blockchain and cryptocurrencies. The use of blockchains might significantly improve our capacity to accomplish our climate change targets. However, A lot of effort is required to achieve these lofty goals.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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Rony Roy

Rony Roy

Rony Roy is an electrical engineer who turned tech author in the Cryptocurrency space. He got block-chained in 2012 and fell in love with tech and its use-cases and has been writing his way through problems since 2016.

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