How Blockchain is Revolutionizing the Carbon Credit Space

Indeed, blockchain technology and cryptocurrencies may be our way to a more sustainable future.

See also: The most energy efficient cryptocurrencies

How blockchains work (and why you should care if you care about sustainability)

Without getting into the white paper weeds, a blockchain is a system designed to record information in a secure way. It is also known as a digital ledger or, sometimes, a distributed ledger. The latter refers to a blockchain where the system’s transaction are decentralized. This means that no single computer holds the entire ledger. Instead, the ledger is duplicated and distributed across a network of computers.

An effective blockchain makes it near impossible to change, hack into, or cheat the ledger. Once you understand how blockchains work, it’s easier to see how they can support sustainability initiatives such as carbon credit tracking.

See also: How the NFT space is becoming greener

Blockchains and carbon credits

Blockchains offer a fantastic way to track and certify carbon credits. Companies, governments, and individuals wanting greater transparency around carbon credits will likely engage with blockchain technology at some point in the near future, if they haven’t already.

In fact, a handful of developers created blockchains specifically to support multiparty collaboration in the field of environment and sustainability.

Devvio

DEVVIO is a greener cryptocurrency that uses a fraction of the energy use of Bitcoin. A recent third-party review measured Devvio’s performance against ISO standards as part of a life cycle assessment (LCA). The DevvX blockchain used 3.5 billion times less energy per transaction than Bitcoin, according to the preliminary report. Devvio expects the final report to be public in late January or early February, 2022.

Devvio was established, in part, to support carbon credit markets and sustainability initiatives. To this end, Devvio is already partnered with Avnet and Panduit. These organizations help connect companies seeking carbon neutral status with organizations generating carbon credits through tree-planting and renewable energy infrastructure projects.

Devvio also recently launched a first-of-its-kind ESG platform tailored to the needs of municipalities. According to a press release, “the DevvESG product suite allows cities and towns worldwide to track the “Scope 3” emissions produced by their network of vendors and suppliers.” United Cities North America (UCNA) selected the DevvESG suite for use by its participating cities in pursuit of Sustainable Development Goal 11 initiatives in Mexico, Canada, and the United States.

Algorand

Algorand is another energy efficient blockchain that supports smart contracts and sustainability initiatives. This blockchain is also carbon negative itself, with a commitment to offset any emissions and then some. Algorand achieved carbon neutral status in April 2021 thanks to a partnership with ClimateTrade, which tracks carbon emissions. By partnering with Algorand, ClimateTrade also makes it easier for corporations worldwide to track their carbon emissions and offsets.

The Algorand team designed a system that calculates the carbon footprint of a specific number of blocks on the chain. This enables the network to calculate the equivalent amount of carbon credit, which it calls the Algorand Standard Asset (ASA). Algorand can then offset and lock away ASAs in a green treasury, allowing the protocol to remain carbon negative.

Carbon credits as NFTs

Like NFTs, carbon credits can also be minted on a blockchain and subsequently be traded securely on the same blockchain. Depending on the system, a blockchain may also be able to verify external carbon credit certificates. This is what two newer projects are aiming to do.

Less well known than Devvio and Algorand, Treedefi and Save Planet Earth (SPE) are also making waves in the blockchain sustainability space.

Treedefi

Treedefi (view here) is not a standalone blockchain but rather a token on the Binance exchange. The project aims to create a development platform and use fees to plant trees. It will then sell these in representational form as NFTs (non-fungible tokens), or, as Treedefi calls them, #nftrees. According to Treedefi, a third of transaction fees on the platform will go towards planting trees.

Treedefi offers a fun dashboard where you can buy and sell nftrees and view data on each tree’s carbon sequestration. Once you own a tree, it generates ongoing CO2 tokens that can offset your own carbon emissions. Or, you can sell these tokens to companies looking to offset their carbon emissions. The secure carbon credit trading space lets users track and verify the trees’ location, planting date, and other identifying information.

Save Planet Earth (SPE / SPEC)

Save Planet Earth (view here) is another cryptocurrency with even greater ambitions than Treedefi. This venture has an impressive team with a wide range of green technology credentials. SPE’s goal is to plant 1 billion trees and develop myriad programs to combat global warming and climate change. This includes afforestation, reforestation, renewable energy, soil regeneration, recycling, and enhanced marine climate management.

Save Planet Earth (SPE) intends to create a carbon credit market. This market will rely on $SPE as an investment token for companies and individuals to offset their carbon emissions. The venture will sell certified carbon credits and produce revenue from merchandise (including merch made from plastic from beach clean-up projects), tree products (see below), various unspecified initiatives, and corporate use of its forthcoming tree-tracking application.

The whole SPE project seems extremely ambitious and wide ranging. For instance, SPE is developing its own application to use drones to monitor green canopy cover at its project sites.

SPE Chain and Carbon Credit Exchange (SPEX)

Going forward, SPE aims to develop its own green blockchain SPE Chain (SPEC) that is carbon negative. This chain will verify carbon credit offsets and facilitate low cost, energy efficient international money transfers. As with all of SPE’s initiatives, this is in the very early stages.

The idea is to have two levels of exchange, with each carbon credit equating to one ton of offset carbon emissions. First, SPE will act as a carbon credit broker, creating an online store where you can buy carbon credits using $SPE. Secondly, SPE will offer an open market for investors to buy and sell carbon credits at their own price. This system assumes that carbon credits will increase in price over time. SPE also plans to have every investment in $SPE generate dividends from real world renewable infrastructure projects.

The SPE blockchain is still in production, so SPE has partnered with Phantasma, a blockchain that offers carbon-neutral Smart NFTs. As part of the deal, Phantasma will use SPE Carbon Credit NFTs to become carbon negative. The hope is that Phantasma will then attract developers who want to build on a green blockchain. SPE’s CCNFTs have been live on Phantasma since November 2021.

SPE is a legally registered company in the UK and claims to have partnered with the governments of Sri Lanka and Maldives to plant trees. When I asked for confirmation of various initiatives from SPE, I got a very vague response which didn’t inspire much confidence. There’s also very little sign of any progress towards completing goals SPE laid out for 2021. Given the incredible scope of initiatives at SPE and its potential impact, I really hope this is a legitimate endeavor and will be watching this space carefully.

Other ways blockchains support sustainability

Companies are increasingly harnessing blockchain technology to make their operations more sustainable. For instance, secure software that runs on the blockchain can offer a more secure and effective way to monitor supply chains and make them more efficient and less wasteful.

Closely tracking raw materials using the blockchain can help companies schedule manufacturing processes to be more streamlined. This helps reduce idling time for machines or entire factories and, in some cases, reduces wasted energy and materials.

Some companies are also realizing that blockchain technology can also help support zero waste manufacturing and the circular economy. Companies can track parts and materials and use these more efficiently. They can also reuse or recycle materials more consistently, so that little, if anything, goes to waste.

Blockchain technology is also useful for tracking and verifying sustainability certifications. This includes some of our favorites, such as Global Organic Textile Standard (GOTS), Oeko-Tex, BlueSign and Fair Trade certification. Just as with carbon credits, blockchains provide a secure way to verify that a supplier or material is genuinely certified.

Blockchains and energy networks

Blockchains are also now being used to help track and distribute energy produced by renewables. One of the major concerns over wind power, solar power, and other renewable energy sources is the variability in production. With variability in energy consumption too, this unpredictability makes it challenging for a power grid to consistently meet energy demands.

Blockchain technology allows these incredibly complex networks to match power production with energy demands much more easily. This could help simplify renewable energy networks, reducing the risk of blackouts and brownouts and the need for large contingencies. And, a more efficient system usually means the cost of energy is lower, making renewables much more attractive.

Final thoughts on blockchains and sustainability

It is an exciting time in both the world of blockchains and for sustainability initiatives. For companies genuinely interested in producing goods and services in a more eco-friendly and ethical way, blockchain technology can make this simpler and more cost effective.

From basic things like offsetting carbon associated with shipping, to more complex actions like tracking an entire supply chain’s greenhouse gas emissions, blockchains offer a secure, credible, and verifiable solution. In time, I suspect blockchain verification will become commonplace for GOTS and other certifications. Blockchains may also help companies generate transparent environmental reports showing a ledger of carbon emissions and carbon credits.

DEVVIO and similar green blockchain networks also allow for sustainability projects to scale up while remaining efficient. And, by supporting decentralized financial networks, blockchains also help sustainability projects find and manage funding, especially from multiple stakeholders.

There’s a lot of scope for blockchain and cryptocurrency to seriously improve the sustainability landscape. Blockchains could have a big impact on our ability to meet climate change goals. But… there’s a lot of work to do to realize these grand ambitions. Technology moves very quickly and there are many players looking to win the race on the carbon credit exchange space.

As always, none of the above constitutes investment advice. Cryptocurrencies are more tempestuous than most investments. So, if you’re looking to support sustainable blockchain projects, always do your own research before investing.