Bringing Transparency and Efficiency to Carbon Markets- August 17, 2022
What if we could increase access and create real global inclusion in the carbon markets? What if we could establish clear standards and transparent pricing for a previously illiquid and obfuscated asset? What if we could establish “one”¹ price of carbon?
We could increase funding for the high-quality, nature-based projects seeking to regenerate nature, while creating a more usable instrument in a market where we’ve seen entrants consistently falter. We believe we can through our recently launched, first-of-its-kind Carbon Opportunities Fund.
Thus far, the blockchain engagement we’ve seen in the carbon markets amounts to games of tokenomics and get-rich-quick schemes with little relevance to how the carbon markets operate. The lack of clear standards and verification protocols for projects – and their outputs – have created a narrative-driven market and tokens priced without an understanding of the underlying asset.
The partnerships we’ve built, and the associated platform, are singularly focused on enabling cross-border, cross-market direct investment in high-quality valid carbon mitigation projects benefiting investors, project developers, and most importantly the environment.
The platform brings unique transparency, integrity, and traceability to the voluntary carbon market by connecting together the sourcing, analysis, tracking in the registry, tokenization and sale of high quality nature-based carbon credits.
The Carbon Opportunities Fund will be the first program to collaborate with the carbon registries directly authorizing and issuing Native carbon credits as tokens. These carbon tokens will be pooled to create a more liquid commodity that can be traded or retired. Pooled carbon tokens set transparent price levels and enable a liquid marketplace to serve. The Carbon Opportunities Fund aims to pool or bundle Native Carbon Credits according to four defined categories of carbon offset credits.
How is what we’re doing different?
- Benchmarked by IFC with tokenization tracked through the Climate Warehouse
- Backed by existing trusted registries in cooperation with the international community
- Underpinned by a sustainable & secure layer one blockchain
What does this mean for the Chia ecosystem?
- In the initial trial, a new CAT will be created, each representing 1 ton of high-quality, nature-based carbon. Each ton will be a direct reference to carbon in an existing registry and ultimately published in the Climate Warehouse.
- In this first batch, carbon buyers will acquire and retire or trade on a blockchain enabled secondary market for retirement by others.
- Once retired, the registries will mark the appropriate carbon as retired in the registry and the Climate Warehouse.
- Once we have shown this works we expect to generate a handful of benchmark CATs to enable global trading and retirement of the various types of high quality carbon offsets on AMMs, DEXs, CEXs, and traditional carbon markets.
According to the Wall Street Journal, in the first half of 2022 there were 98M tons of carbon offsets of all types sold in the existing voluntary markets. The price for nature-based credits averaged in the $15 to $18 range. We believe that price is low due to many of the factors outlined above. We are confident that demand far exceeds supply and this project can go a long way to stimulating additional investment in high-quality projects recurrently generating more offsets that add liquidity to this market.
We believe that the power and security of our blockchain, and our partners, can finally create a trusted, global market that hyper-scales the voluntary carbon market and materially reduces the carbon in our atmosphere.
¹Ultimately there will be a handful of types of high quality carbon CATs just as there are grades of things like barrels of oil.