Carbon-bound crypto tokens alarm climate experts

crypto enthusiasts are hurrying to bring the green revolution into the Blockchain, but surrounding experts fear that the new boom could undermine the efforts to combat climate change when digitizing CO2 compensations.

Since October, almost 20 million carbon offsets - units that use companies to compensate for greenhouse gas emissions - have been converted into digital tokens. The tokens can be used to compensate for emissions or converted into a new cryptocurrency, climate.

The hustle and bustle of the activity came in the middle of a strong increase in the price of the underlying compensations, each of which is supposed to represent a ton of carbon that was avoided or removed from the atmosphere. So -called "natural -based" compensations, such as those generated by tree plant programs, according to S&P Global Platts rose from USD 4.65 per ton to over $ 14 between June 2021 and April.

eagerly to benefit from rising prices and broader demands for a global transition to cleaner economies, crypto retailers have searched the CO2 market for older, cheaper compensation for buying and token-and thus combined the two unregulated markets for digital assets and CO2 compensations.

"Junk" credits that have been bought by crypto dealers in large quantities in the past few months had previously suffered for years, say carbon analysts. Potential buyers were deterred by concerns that these old credits, many of whom were generated before 2010, may not really represent the promised CO2 savings.

But from the end of 2021 they were suddenly popular when the crypto communities built on online messaging boards went on a shopping tour.

Such activities have worried climate experts. Gilles Dufrasne, Policy Officer at Carbon Market Watch, said that he was concerned that the new system would lead to offsets of poor quality. Users who wanted to use tokenized credits to compensate for their emissions could forget or do not know that the underlying units were "garbage", he said.

supporters say that tokenized loans are more uniform than traditional offsets that can be generated from many different project types and are difficult to compare. However, critics emphasize that offset quality is the more pressing problem. Vaughan Lindsay, managing director of the offset seller Natural Capital Partner, said efforts to make loans, "remind me of secure guilty title. If you constantly roll up things, you have no idea what you buy."

A large part of the latest hypes focuses on the digital currency climate that shape traders by trading tokenized offsets. The pitch of the founders of Klima claims that the cryptocelt can contribute to solving the climate crisis by driving the demand for compensations and-in return-the CO2 price.

The price of the climate rose to a record high of more than $ 3,600 in October 2021 before collapsing around $ 20 this month. The price for tokenized offsets fluctuated between $ 2 and 9.

during this period

Internet discussions indicate that the motivation of the dealers is different for the purchase of the new digital assets. "I hope I can get rich thanks to the climate change," wrote a member of a thread on the topic of climate in the chat app Discord.

Elsetube moderator Jcrypto explained to his 8,000 subscribers elsewhere that "CO2 credits are suddenly super important" because environmentally polluting companies are "frowned upon". Tokenized offsets are "strongly undervalued" and would "create millionaires," he said, adding: "Just remember that I am a capitalist.. I'm not like an environmental giant."

There were also concerns about the anonymity of the founders of climate that use pseudonyms such as "Archimedes" and "Dionysos". The confidentiality "enables us to concentrate on the delivery of a good product," said Archimedes and rejected it to reveal their identity.

Archimedes said that the group was "not really" concerned about understanding the dealers for the underlying market. "Regardless of understanding, people are committed and ask questions later," he added.

carbon market experts have tried to decipher what effects the tokens on the compensation market and their role in limiting global warming could have.

Some fear that the focus is on crypto and then on the climate, and refer to the energy intensity of certain parts of the crypto universe.

"All of this screams for a little climate, strongly for blockchain," said Eli Mitchell-Larson, a researcher at Oxford Net Zero. The complexity of the systems, he said, "can the key question be disguised [for anyone buying offsets]: Have you clearly removed or reduced a ton of carbon?"