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Pitch

A new cryptocurrency will establish a universal carbon price and incentivize the sequestration of carbon dioxide from the atmosphere


Description

Summary

Voluntary carbon markets accounted for only 18.5 million tons of CO2 equivalent offset in 2016. To restore the global atmospheric levels of CO2 below the recommended 350ppm, we need to remove greater than 750 billion tons of CO2 from the atmosphere. There are many interested potential buyers of offsets (ranging from wealthy individuals to large corporations) who have a difficult time finding valid offset projects that make a meaningful difference. Simultaneously, developers of offset projects face huge burdens of business development in order to find a counterparty to buy their offsets. This results in low volume of offsets purchased at variable and unpredictable prices. 

What's more, many of these offsets are not net negative. Meaning, they are not removing carbon dioxide from the atmosphere. The arithmetic of climate change is simple. Whatever we have emitted must be removed from the atmosphere and stored permanently in another form. [1] 

Our solution is to build a new exchange marketplace that removes the need for suppliers to find a counterparty and provides verified negative-emission offsets that are available to buyers for immediate purchasing. We will record the transactions in a blockchain decentralized application (dapp) so that there is complete transparency over who provided the offsets and who purchased them. To facilitate this exchange, we will create and issue a new cryptocurrency token where one token will always buy one 1 ton of CO2 equivalent offset. The tokens will be issued in a public crowdsale, after which speculative investors will trade the token on third-party cryptocurrency exchanges. This will establish a price for the token, which ultimately establishes a universal carbon price. There will be a small amount of tokens destroyed with every transaction, so the total number of tokens in circulation will decrease over time. This will cause an upward pressure on the price, incentivizing more carbon offset projects than are currently happening.


Is this proposal for a practice or a project?

Project


What actions do you propose?

We propose a technology project to be established as an independent business. We will build this out in phases:

  1. Phase 1 - Reselling existing carbon offsets to generate cash flow and establish relationships with potential buyers in the platform
  2. Phase 2 - Development of the platform and public token crowdsale
  3. Phase 3 - Launch of the platform for the public to transact


Who will take these actions?

Our organization's role will, in addition to developing the technology platform, primarily focus on business development of both sides of our marketplace: providers and buyers. 

Buyers

Our marketpace is intended to serve the voluntary carbon markets. The buyers in these marketplaces include private and public companies, as well as individuals, nonprofits, and government organizations. In 2016, there were approximately 18.5 million tons of CO2 offset voluntarily.[2] (In reality, this number is smaller, as there are many types of offsets that are counted but do not actually physically acount for a ton of CO2 being removed the atmosphere.) This number of offsets paid for voluntarily has been in decline since 2011. We believe we can remedy the issues with the current marketplaces in order to grow the amount of negative emissions offsets paid for voluntarily. 

Offsetters

On the provider side are project developers, entrepreneurs, and enterprises. Project developers are organizations that build out projects such as reforestration of a region, or a farming co-op that changes practices to no-till, cover crops, and rotation. Entrepreneurs are creating new products and companies that use carbon dioxide as a feedstock to the development of their product. Examples include Ecovative[3], a business that uses carbon-negative mycelium to manufacture furniture and products. Enterprises are just more established than early-stage entrepreneurs. An example of this stage of company is Interface, a manufacturer of a carbon-negative carpet.[4] These are the types of potential buyers who will sell the negative carbon credits that they produce into our marketplace.


Where will these actions be taken?

This is a globally-available application to be used on the public internet. Providers of offset projects can be located anywhere in the world. Buyers of offsets can also be located anywhere in the world. The marketplace is completely voluntary and does not participate with mandatory compliance programs that exist in various jurisdictions.


In addition, specify the country or countries where these actions will be taken.

United States


Country 2

Mexico


Country 3

China


Country 4

Kenya


Country 5

No country selected


Impact/Benefits


What impact will these actions have on greenhouse gas emissions and/or adapting to climate change?

The greatest effect of building our marketplace will be for the first time in history establishing a truly universal carbon price. Our marketplace will only allow negative-emissions to be sold into it. Meaning, every credit sold in our marketplace will be physically tied to a ton of CO2 that has been removed from the atmosphere and permanently sequestered. 

Every time a buyer spends a token in the marketplace to buy a negative emissions credit, there will be one ton of CO2 that has been physically stored. Provided that these negative emissions credits have been validated—to ensure no one is cheating and saying they are sequestering when in fact they are not—we can simply count how many credits have been purchased to measure the net impact of our project. Credits purchased = tons of CO2 equivalent stored. 

18.5 million tons of CO2 were offset voluntarily in 2016. The actual number of negative emissions offsets is somewhat less than that because of how offset projects are currently credited. For our purposes, only forestry and land use projects in the current ecosystem projects should be counted as negative emissions credits. This number is around 13.1 million tons.[2] 

Around 750 billion tons of CO2 need to be removed from the atmosphere right now if we are to lower the global atmospheric carbon amount to below 350 parts per million. Our ambitious goal is to see 1% of that necessary amount (7.5 billion tons) transacted through our marketplace by 2030, and 5% (37.5 billion tons) by 2040.


What are other key benefits?

Our marketplace will act as a catalyst for increased investment in carbon sequestration technologies. Once our model establishes a carbon price, new business models will be able to develop around it. Financial lenders could offer project developers a fixed fee and take the tokens as a hedge. Holders of tokens could decide there are a certain number of tokens worth spending in the marketplace in order to see an increase in the value of their remaining tokens. There are myriad ways entrepreneurs could take advantage of a tokenized carbon price, and we are eager to see how they do so.


Costs/Challenges


What are the proposal’s projected costs?

The nature of the public crowdsale of the utility token to be used in the marketplace is such that we expect to raise tens of millions of dollars that will pay for developing further the platform and funding business operations in the way of marketing, business development, and capitalization of carbon credit assets to seed the marketplace. 

Based on discussions with attorneys, our team, and past experiences, we estimate the following costs will be necessary before we are able to sell any tokens: 

  • Software development: $50-100k
  • Business development: $20-40k
  • Legal compliance: $100-200k

 

Total: $170-340k

 


Timeline

Once the marketplace is operational in 2018, the impact will be immediate. Tons of negative emissions paid for will account for real carbon sequestration that has taken place. 

We estimate healthy growth rate in the usage of our marketplace because of the cryptocurrency factor. By 2030, we anticipate accounting for at least 7.5 billion tons of sequestered CO2 having been paid for in our marketplace. By 2040, we estimate reaching approximately 40 billion tons sequestered. We expect so much growth because of the way the cryptocurrency token is expected to grow. As the supply of tokens decreases, the value of the token should go up. As it increases in value, more people will be incentivized to sequester carbon and claim their negative emissions credits and be paid in tokens.


About the author(s)

Paul Gambill is an entrepreneur and product manager living in Seattle, WA, USA. He is a co-founder of the Geagora Carbon Marketplace. Paul studied Computer Systems Engineering at Arizona State University (2010) and earned his master's in Engineering Management from Duke in 2011. In 2015, Paul established the first community dedicated to carbon removal called Carbon Removal Seattle. After networking with various other organizations, he met Christophe Jospe in early 2016. Paul has 6 years of experience in managing mobile and web application projects for clients, and has shipped well over a dozen different apps to the public. He discovered Bitcoin in 2011, and has been an avid experimenter with blockchain technologies ever since. 

Christophe Jospe has a deep expertise in carbon management and carbon removal solutions through work as an analyst, fundraiser, and carbon offset reseller. He holds a Bachelor of Arts in Political Science and Middle Eastern Studies from Colgate University (2008) and a Masters of Public Administration in Environmental Science and Policy from Columbia University (2014). While at Columbia, he worked at the Lenfest Center for Sustainable Energy under physicist Dr. Klaus Lackner. In August 2014, he moved with Lackner as chief strategist to establish the Center for Negative Carbon Emissions at Arizona State University. He founded Carbon A List in June 2016 to move back to NYC and expand the scope of his entrepreneurial work.


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IOT and Blockchain to Measure Carbon Emissions of Large Emitters


References

[1]: Christophe Jospe and Klaus Lackner, https://drive.google.com/file/d/0B4njM0jdvKvJTVJDSGFNV25Ld3c/ 

[2]: http://www.forest-trends.org/documents/files/doc_5591.pdf#

[3]: https://ecovativedesign.com/home?ref=lp 

[4]: https://www.interface.com/US/en-US/about/press-room/carbon-storing-tile-release-en_US