The idea was simple: the energy company, Greenland Gas and Oil, would not extract oil from an area on the east coast that it had exploration licences for. Instead it would monetize keeping the oil in the ground via a partnership with the tech company, Carbonbase, which works on offsetting carbon emissions.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
The attempt is just one example in a mass of tech ventures that hope to fuse concerns about global warming with the public’s interest in Web3 technology. A surfeit of start-ups have burst on to the scene this year, variously promising to “green” bitcoin, make NFTs sustainable and solve niggling problems in carbon markets once and for all.Article content
Used well, analysts say Web3 technologies could bring greater integrity to the carbon market and help verify the credentials of products labelled as “sustainable”. But critics say complicated new initiatives could just as easily exacerbate existing problems in two unregulated markets , lure more people into a space with its own big emissions problem, and contribute to more greenwashing.
The sector is notoriously complicated, with its own well-rehearsed problems: a lack of liquidity, opaque pricing and concerns about the quality of credits. Since the late 1990s the decentralized market has only become more complicated as it has grown. Thousands of projects that generate offsets exist, such as tree planting schemes that can sell credits either directly to end users or via middlemen.
And while traditional offsets can come from thousands of different environmental projects and are difficult to compare, each of the new digital tokens on offer — JustCarbon’s JCRs or Moss.Earth’s MCO2s, for example — are uniform and trade at the same price. Each company decides on a range of offsets, such as any from forestry schemes, that can be converted into its standardized token.Not everyone is convinced.
Verra banned the tokenization of certain credits in May. In August it launched a consultation about designing “anti-fraud measures” for crypto-carbon — new rules that could allow tokenization to resume.