Regeneration! (2): The Regen Network offers blockchain tools to make carbon offsets real, not fake - and convenes others to join them
Led by our friend Vinay Gupta (founder of Mattereum, launch wrangler for Ethereum), we’ve been wondering when Vinay’s prediction for blockchain software as the means whereby we finally measure the carbon produced in our economies, would come to fruition.
The second of our “regeneration” blogs this week (first one here) shows some projects and initiatives who are concretely building that - around the idea that digital ledgers might be the way to make a “carbon market” properly world.
The Regen Network is offering a full suite of services to communities, enterprises and constitutencies that want to start accounting precisely for their carbon impact - and are interested in using the tools of blockchain (unique identifiers, currency/tokens which incentivise behaviours) to encourage zero-carbon production or usage. Is blockchain going to make carbon offsets real, rather than faked?
This Feb 2022 blog from Regen Network’s Medium page gives a generous overview of the other players in this field, which they are clearly keen to collaborate with:
Last year, the crypto world saw new contenders making their voices heard at the intersection of climate and carbon. 2021 saw a myriad of evidence that our blue planet is severely under threat and that it’s running out of time — severe weather patterns were recorded across the planet, as well as it being recorded as the fifth hottest year ever.
2021 was also the year when the world saw an eruption of ReFi or Regenerative Finance projects, with many initiatives launching on-chain carbon offset credits, such as KlimaDAO and Regen Network. Crypto adoption has accelerated on a dynamic scale in the past year. Equally, headlines are being made in newspapers such as the Wall Street Journal, illustrating the pioneering work of KlimaDAO.
On-chain holds power for the carbon market
The demand for carbon in the DeFi [decentralised finance] space, especially coming off the heels of COP26 and its commitments, is affecting markets and changing the narrative around crypto’s relationship to carbon and climate. Having data and information on-chain allows for greater transparency, and it solves the major issue of double-counting credits.
Bringing the data into the public domain allows for more explicit and cohesive market conversations, according to Sarah Baxendell, Director of BD at Regen Network. “I think we collectively as people are interested in utilizing blockchain mechanisms for global carbon accounting. Just see this as really a ripe opportunity to start bringing big datasets onto the chain and having much greater price transparency inside of that environment,” she says.
Regen Network is building an on-chain registry system for carbon claims and integrating data into the marketplace with Regen Registry. This aids in bringing the blockchain as close to the claims process as possible to keep track of the data and methodology.
The importance of quality carbon credits is crucial
Not all carbon credits are said to be ‘prime.’ Having high-quality carbon credits is important so that industry-wide adoption and integration does not result in an accumulation of low-quality carbon credits. For carbon offset credits to be recorded as high-quality, it refers to the level of confidence based on the credit fulfilling the basic principle of substituting the GHG [greenhouse gas] emission reductions that an organization produces. This means that the world must be at least as well off when you use a carbon offset credit as it would have been if you had reduced your own carbon footprint.
There are different types of carbon credits, including hydrocarbon credits, forestry carbon credits, and natural gas carbon credits. Offsetting with ‘junk credits’ does not do our planet good. It could cause more harm than anything else. Last year, Australia conducted a study that concluded that about 20% of carbon credits created under their central climate change policy did not represent real cuts in carbon.
Studying the Oxford Principles for Net Zero Carbon Offsetting will also allow for a better understanding of the standards that need to be met:
Principle 1: Reduce emissions, use certified offsets, and use best practices for offsetting strategies
Principle 2: Remove more carbon from the atmosphere than is currently being emitted
Principle 3: Carbon needs to be locked away indefinitely
Principle 4: Industry standards to create net-zero aligned carbon offsetting
A leader in the race to join forces with blockchain
Verra is a well-respected institution that develops and manages globally applicable standards for certified carbon emissions reductions. Late last year, they released a statement that they were opening the door to engaging with blockchain climate initiatives, spurring the potential to intersect the existing carbon market and tokenized carbon credits. They addressed their willingness to join forces with the crypto world by putting their Verified Carbon Units (VCU’s) on-chain.
But they weren’t always on board. On the heels of the Toucan Protocol and the KlimaDAO launch, Verra looked over at what was happening on the blockchain side of the fence and noted that they didn’t want to take responsibility.
But, not too long afterward, the follow-up was positive and quite the opposite, which brought a significant shift in perspective of how these mechanisms and technologies are essential and where collaborations of efforts can and will stem from.
Joseph Pallant, Founder of Blockchain for Climate Foundation, has been setting up carbon offset projects since 2004. “[We’re seeing] the tighter linking of the crypto space and the incredible explosion of innovation that’s happened in this space that quite frankly, didn’t wait for an invitation. It went ahead and did it because it’s what needed to get done,” Pallant says.
The Blockchain Infrastructure Carbon Offset Working Group (BICOWG) is an alliance of blockchain protocols, projects and nonprofits working alongside one another to explore carbon measurement methodology and incentivize carbon markets. They stand firmly behind Verra’s announcement, knowing how powerful the connection and collaboration of various teams can be as their core group consists of members from Regen Network, KlimaDAO, Toucan, SZNS, FungyProof, F2Pool/Stakefish, Blockchain for Climate, and Gitcoin.
Where different worlds meet, collaboration and cooperation will be integral to success
It’s only when we collaborate with one another, stand together, and support each other’s endeavors that growth and challenge are born. Utilizing the technology that those in these spaces have at their disposal will drive forces together. The intersection of these standards with the crypto world will potentially allow for greater adoption and real-world impacts.
At Regen Network, our community’s goal is to build foundational fintech infrastructure for ecological claims and data. This means serving as the ‘Layer 0’ upon which other projects and protocols may build upon and harness to execute their own climate-focused business models.
There is one planet. There is a limited amount of time. And climate change is real. In order for a shift to occur, we have to make as much change and evolution in this marketplace. “And the more of us holding each other’s hands, moving that dial forward, the stronger we’re going to be, as a community. And the easier it’s going to be to actually positively affect climate change in a meaningful amount of time; that our kids will look back and say, ‘Thank you for bringing everyone along on the journey.’” (Sarah Baxendell, Regen Network)
Gregory Landua from Regen Network says that it’s not about one system to rule them all when it comes to carbon. It’s about collaboration, coordination, and cooperation. “Competition, in this case, is: how do we most effectively regenerate ecosystems in sequestering carbon? How do we most effectively represent the facts about ecological health or carbon sequestration so that it’s as transparent as possible? And so competing for that creates a very interesting, collaborative dynamic,” he says.
Nothing comes without its risk, however. Crypto and traditional institutions, at their core, don’t have the friendliest relationship. For this bridge to be built successfully, it will be essential to lay solid foundations down and set up mutual trust and mechanisms to ensure quality carbon and integrated working relationships between industries. “We need to move slow to move fast.” (Gregory Landua, Regen Network).
At the beginning of this year, the BICOWG held a Twitter Space [embedded where they explored this intersection in detail: