![]() ![]() This is a way of showing that the emissions reductions represented by each credit (one tonne of CO2) have been counted towards a corporate or individual's goal - essentially, used up.īased on this, crypto companies then issue a digital token worth one carbon credit, which can be traded on crypto exchanges or "burned" by the buyer to offset their emissions. To put credits on the blockchain, crypto firms first "retire" them on the Verra system or on other carbon credit registries like Gold Standard and the American Carbon Registry. One crypto carbon project, KlimaDAO, which issues tokens backed by carbon credit projects, reported more than $3 billion in transactions during the last three months of 2021. ![]() Here's how crypto players have impacted the voluntary carbon market: How do crypto companies claim to help fight climate change?Ĭrypto firms say they want to help fill a big financing gap for projects that tackle climate change, arguing that their involvement will expand the market for carbon credits that fund emissions reductions and nature conservation efforts.Ī 2021 McKinsey report said about $4 trillion in new funding is needed over the next 30 years to expand such projects - to produce clean energy, deal with waste, or preserve forests and other ecosystems - on the scale needed to curb climate change.Ĭrypto companies claim that by putting carbon credits on the blockchain, they can expand liquidity and reach a wider customer base, driving more money to conservation efforts worldwide. The Thomson Reuters Foundation found that one major pioneer in this new market, Brazilian "green" crypto firm Moss, bought carbon credits it said privately were of "low quality" - a judgment it later reversed in response to the investigation - and mixed them with others to back its digital token, selling them on for far more than it paid. The buyers usually then "retire" the credits - meaning they are removed from the market and cannot be resold - to offset greenhouse gas emissions from their own activities.īut instead of using them to compensate for emissions, some crypto players have put these credits on the blockchain ledger, and floated them on crypto exchanges where they can be bought, sold and traded for other cryptocurrencies. ![]()
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