Can Blockchains Save The Earth?
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Ethereum isn’t exactly a green technology, but a new application on the blockchain could put a serious dent in carbon emissions. Granular, an agricultural company under the DowDuPont umbrella, has partnered with a blockchain startup to help business reduce their environmental footprints. Granular will provide optional early access to Nori (NORI), a blockchain-based carbon market, allowing farmers to gain additional revenue by reducing atmospheric carbon.
The partnership was announced in a joint press release, in which the companies declared their shared goal of “turning carbon into a cash crop.”
Under the new pilot, to be launched early next year, farmers and companies will begin trading carbon offsets on Nori’s digital marketplace. Using a blockchain-based ledger, companies will be able to pay farmers to take carbon out of the atmosphere through techniques like soil sequestration, thereby reducing environmental impacts while providing financial benefits to the farmers.
“The vast majority of farmers we work with make stewarding their land a high priority,” said Tamar Rosati, VP of Product for Granular. “We’re excited to play a role in helping them continue to do so at a profit.”
Although paid carbon sequestration is not new, previous offset markets have been dogged by inefficiencies, making it difficult to verify that companies are getting the carbon reductions that they paid for. By placing transactions on a transparent, verifiable blockchain, Nori says that the new market can reduce economic frictions:
By accounting for the ownership of the CRCs [Carbon Removal Certificates] on the blockchain, Nori eliminates the double-counting problem that has plagued past attempts at creating healthy carbon offsets markets. Nori’s cost structure is substantially different from traditional carbon offset markets.
A Target Market For Blockchain Tech
While Nori is the first marketplace for voluntary carbon offsets, it’s not alone in using blockchain tech to add efficiency to environmental markets. Veridium, an IBM-backed startup is creating a similar marketplace on the Stellar blockchain so that companies will be able to efficiently trade carbon credits.
Carbon trading is an important element of environmental policy, by allowing carbon-efficient companies to sell the rights to their excess emissions to less efficient ones. However, traditional carbon markets are highly opaque, as Veridium CEO Todd Lemons explains in an interview with TechBullion.
“The current market for environmental assets is approximately $200 billion dollars,” Lemons says, “but most of these assets are traded over-the-counter and are illiquid. When you consider that secondary trading in liquid markets is typically 50 times the primary market, you can see the value potential of these markets….”
Like Nori, Veridium’s carbon market is expected to open for business early next year. But that’s just the first step. In the future, according to Executive Director Jim Procanik, the company will move on to tokenizing other environmental assets like water credits, biodiversity credits and wetland conservation credits.
That might not be enough to stop the political inertia which has allowed temperatures to cross one tipping-point after another. But the introduction of transparent, verifiable ledgers could allow the people and companies who want to reduce their carbon footprints to do so, without the extra transaction costs of an inefficient market.
The author has investments in Stellar and Ethereum, which are mentioned in this article.