Last week, the International Finance Corp (IFC) reported to Reuters that it was supporting a blockchain-based platform for the trade of carbon offsets. This move is set to attract more institutional investors to environmentally sustainable projects. Using a blockchain-enabled digital database ensures that data can be shared with the public with the help of a dcentralized network. This will definitely boost the usage of carbon offsets in comparison with traditional methods.
About Carbon Offsets
Companies and organizations make use of carbon offsets when calculating their carbon footprint. They are supported by initiatives that reduce emissions, including planting trees or developing solar and wind energy.
In the past year, a number of financial technology companies have emerged to convert carbon offsets into digital tokens. However, the market has found it difficult to gain traction with businesses and institutional investors due to uncertainties regarding the source and environmental advantages of some traded credits. Environmentalists have also criticized blockchain technology for requiring too much energy.
For example, Verra, the largest repository of carbon credits in the world, has remarked that it will not allow the tokenization of carbon offsets.
A representative of IFC informed Reuters that the organization would only engage in sourcing, tokenizing, and selling unused credits from a well-defined registry. The credits must pass all additional quality checks.
Aspiration, Chia Network, and biodiversity investor Cultivo have partnered with IFC to start the Carbon Opportunities Fund. The Carbon Opportunities Fund shall provide carbon offsets on the blockchain. The projects will be chosen by Aspiration and Cultivo, and Chia will provide the technology for tokenization.