AOPAMAX

This post will be a short explanation of the basic new idea. The title is chosen for several reasons.

One is the fact that like the name “Bitcoin” it has seven characters. Seven is a lucky number. And I believe humanity needs luck to somehow deal with global warming.

The X is there for the same reason it is in “X-rays”. Roentgen did not know exactly what he was seeing when he made his discovery. So he chose “X” in the name of X-rays as a placeholder for “unknown.”

With my idea, there are many unknowns too.

I recall that Adam Back did not know of Bitcoin when he published his ideas about proof of work. Bitcoin was a later evolution of that basic concept.

And my idea is a later application of Bitcoin.

In the same way, I hope that progress does not stop with that idea. Or maybe that someone smarter as me makes the basic concept work by changing it in some way or other.

And the combination “MAX” is short for “maximalism”, the idea that you should use Bitcoin and only Bitcoin.

It is also short for “Method of Accounting X”.

AOPA is short for “Advance Offset Periodic Adjustment”.

Advance Offset is a way to make fossil fuel companies reduce production, increasing their profits massively because of the higher prices that come with that.

It basically means that oil companies promise to sell only as much oil as they have been taking CO2 out of the atmosphere in advance. That would be the starting point.

Such a promise would be basically the same as under the Paris Agreement. The basic mechanism of that is that each party promises some plan of reducing emissions. And each party does these promises independent from other parties.

In the same way, each oil company would independently publish a plan on reducing their production. And on taking out a percentage (possibly over 100) of the carbon emissions caused by the oil produced out of the atmosphere.

One big advantage of using this mechanism is that there would be no problem with antitrust law.

If oil companies decided to reduce production in a coordinated way, that may be illegal under antitrust law, requiring legislation to make sure that antitrust does not get into the way of solving climate change.

Of course, the CO2 removal industry is still nascent, especially compared to the oil industry. So maybe, to start out, they would need to be modest in their ambition. For example, promise to only sell 100 times of the carbon they removed, meaning a removal rate of 1 percent.

That would still be better than zero, which is where we start out from now. As far as I know, there is no oil company that is removing carbon from the atmosphere now. Especially not at the scale needed. And not one of them removes as much, or even more, than it causes to be emitted by digging out and selling oil.

PA would mean “Periodic Adjustment”.

While industry would start out small and modest, the ambition would grow over time.

Bitcoin has difficulty adjustments in the proof of work model, which are designed to keep the time between new blocks close to 10 minutes.

In the same way, one could imagine the removal rate growing over time. It might reach over 100 percent, which would mean that any oil company producing with a removal rate over 100 percent would, on balance, remove more carbon than it put in.

The other party in the oil market is the buyer. One could imagine buyers stating their policy of only buying from sellers that adopt a certain minimum standard. And that in turn may be another reason for oil companies to adopt AOPAMAX policies. If the market wants safe oil more than it wants cheap oil, that might be a powerful incentive.

Yet another party involved would be regulators. The EU recently decided to phase out gasoline cars, a huge user of oil. That decision was based on the wish to finally do something about rising CO2 levels.

One could imagine policy that does not completely ban the use of oil, but instead requires a minimum standard removal rate, just as existing emission standards for cars already require minimum mileage per gram of CO2 emission.

Remains to explain the meaning of “Method of Accounting X”.

One thing Bitcoin brings to the solution is reliable accounting.

Any promise of an oil company to remove CO2 is only worth as much as the trust that the promise will be or has been acted on.

While Bitcoin does not require trust in any of the actors involved, it may help to build trust in carbon removals.

For one, the blockchain is open to all. There is transparency built in from the start.

So if a company like Exxon announces it has paid for removal of some number of tons and links some satoshis to that removal amount, anyone can check what happens to those later on.

If some other party interacts with those, it may work as a confirmation.

A simple case would be Exxon selling the satoshis in question or part of them to a third party. Everybody would be able to see and verify that transaction on the public blockchain. The buyer might announce and make public the transaction, which would add whatever trust the buyer enjoyed to the trust already placed in Exxon’s announcement.

Or some actor in the business of verifying carbon removals might send one symbolic satoshi to the address in question, after checking that the removals have been real and have been in the amount Exxon has announced. That again would add trust to Exxon’s announcement, since it would be backed by whatever verifying due diligence the actor providing the confirmation added to the one Exxon did in the first place before paying for the removals.

Bit.ly link for this post: https://bit.ly/3M6uv5x