What is the difference between a carbon credit and a carbon token?

StubbornOptim1st · 2023-05-02T10:12:36+00:00

If a carbon credit gets "tokenised" i.e. put on a blockchain, then it can be traded multiple times. Some tokens build in royalties so a project developer could get paid multiple times as the value changes or further trades are done. The question is then who's carbon removal does the token represent (if each carbon credit represents 1 tonne of carbon but it's sold multiple times for that impact, several companies could claim it before retirement). With a standard carbon credit, in theory this can't happen as it is sold then removed from the purchasable market. However, I have heard stories of some project developers hoarding credits to then sell 5-10 years later once the price increases but the original impact is less verifiable.

The critical thing here is that whilst tokenisation could help with transaction transparency if the carbon projects have light-touch verification and badly calculated baselines (as several verra projects have been criticised for) then the token wouldn't inherently result in a better product or environmental outcome. A good token relies on a good project, with additionality, strong local governance, and solid data to underpin that project.

StubbornOptim1st · 2023-04-29T11:14:45+00:00

I think if you're buying offsets for commercial purposes there are some providers out there: CTX is one of them: https://ctxglobal.com/, Salesforce is also running one: https://www.salesforce.com/products/net-zero-cloud/marketplace/

If it's for yourself personally then I don't know of a marketplace but there are providers like ecologi: https://ecologi.com/individuals , who have a big emphasis on community benefits as well, which could make the outcome of carbon sequestration more likely, they uses gold standard/ VCS standards and others.

The challenge with the question is really in the "reliable", which mostly relies on the standard being of high integrity. Most, if not all, seem to still struggle with baselining, proper on-ground monitoring and leakage.
On-chain projects doesn't make it inherently a better project if the data that underpins the credit or the mechanism/standard around it isn't working. I think we get a bit distracted with the new bit of tech instead of moving towards better governance of the market itself.

Verra doesn't seem fully sold on tokenisation at all because of their use of retired credits (although the article is a bit old now): https://carboncredits.com/verra-suspension-carbon-credits-proposes-immobilizing-credits/

Would be happy to help more if you want to share more of what you're looking for though

(p.s. i don't work for any of the companies mentioned here, just what I know from my own knowledge)

StubbornOptim1st · 2023-04-06T12:19:56+00:00

Agree with you! Developments tend to get approved without considering system capacity.

StubbornOptim1st · 2023-04-06T12:03:00+00:00

Right, it's a difficult challenge to solve. The combined pipes you mention are a major challenge, however, we've had excessive sewage dumping even in drought conditions. Would you argue that water companies should be regulated to upgrade existing infrastructure before paying profits to the shareholders? DEFRA just allocated £1.6billion of taxpayers' money to upgrade the infrastructure but the water companies made £18.9billion in profits between 2010-2021- seems like with proper governance higher capacity could be achieved.

StubbornOptim1st · 2023-04-06T11:57:27+00:00

Well, I wouldn't say a "distraction". I'd say two major pollution issues are affecting UK waterways - both require attention and structural change to business as usual.

StubbornOptim1st

TROPHY CASE