Carbon Chain — trading carbon credits on the blockchain
The Paris Accord was established by an overwhelming majority of the United Nations member states as a mechanism building upon the intent of the Kyoto Protocol to adapt to and mitigate global climate change. The Paris Accord includes a set of policies that are intended to respond to global environmental changes in order to preserve and to build human civilization so it could thrive in a better equilibrium with the enviroment.
Carbon credits are a mechanism, which allows signatory parties to the Paris Accord to monetize and trade rights to emit carbon exceeding the quotas stipulated in the Paris Accord and it’s ratification on the national level.
The United Nations has established a protocol, which allows member states to set up cap and trade policies, carbon tax and a carbon credit mechanism on a national level in order to govern the productive economy under the Paris Accord.
Companies willing to partake in the mechanism can do so voluntarily by purchasing carbon credits. Carbon credits allow individuals, companies and governments to exceed their quota in carbon emissions — which mostly consist of fossil fuels and associated emissions — and to exchange these credits for emission rights or use them to support a registered project that helps to reduce carbon emissions. Such project can for instance be a renewable energy project. A carbon credit is defined as a unit of exchange issued by The Clean Development Mechanism -board at the United Nations as an equivalent of one tonne in CO2 in emissions rights.
Contemporary mechanisms governing the use are riddled with challenges pertaining to governance of issuance of carbon credits, auditability and tracking the performance of projects qualified within national carbon credits schemes. The challenges mostly consist of administrational issues, stemming from the projects in question being managed by politicians and governmental agencies. Structurally, this sort of governance model gives rise to problems in verification and authentication of the performance of the registered projects, much in the same way as problems in projects in international development have administrational issues.
Blockchain technology can mitigate administrational challenges. Blockchain allows immutable ledger of transactions, and a method of certification practically immune to forgery and falsification. Any and all relevant datasets and documents may be reliably authenticated, and shared in a public ledger available to independent auditors, partners and governing agencies. With help of blockchain technology indeed, challenges related to administration, management and corruption can be effectively mitigated, as everyone in the ecosystem have a platform every actor can rely on for authenticity.
Carbon Chain is a platform that offers willing participants an access to trade carbon credits, and apply them in their own projects or a project hosted by another participant in the mechanisms stipulated by the Paris Accord and the United Nations or one of the signatories to the Paris agreement. Once an investor has made an investment into Carbon Chain -tokens, the tokens may be exchanged for official carbon credits with the United Nations. The carbon credits may then be invested in qualified projects.
Beyond blockchain, what makes Carbon Chain unique, is that the platform gives individuals the opportunity to trade in carbon credits. While accredited, high net worth investors might be able to partake in this mechanism through a centralized platform, Carbon Chain makes the mechanism accessible to the greater public.
The projects interacting with carbon credits and therefore also by Carbon Chain -tokens, have to be registered with the United Nations in order to receive carbon credits. Typically these projects consist of developments that help in mitigating carbon emissions, such as renewable energy projects, carbon-neutral infrastructure, carbon sinks, cleantech projects, projects in cyclical economy and so on.
The platform runs on a set of smart contracts on the Ethereum platform.
Initially, the tokens are distributed through a Discounted Private Sale associated with a Token Generation Event.
Carbon Chain is run by a company, Carbon Chain International. The company pledges 30% of its funds in purchasing carbon credits from United Nations Framework Convention on Climate Change, UNFCCC, and in registering new projects that qualify for carbon credits worldwide. The rest of the tokens are invested in existing registered projects that qualify for carbon credits. The project behind Carbon Chain itself is to be registered with the UNFCCC CDM board.
A holder of Carbon Chain tokens may trade their Carbon Chain tokens on public exchanges for prospective buyers at the spot price, or sell the tokens back to Carbon Chain International to offset their carbon tax liability or to demonstrate their adherence to the Paris Accord. The exchange to carbon credits happens on a Carbon Credit Exchange.
Carbon Credit Exchange:
Carbon Credit Exchange is a public exchange maintained by Carbon Credit International that provides a mechanism to trade cryptocurrency for Carbon Credit tokens and Carbon Chain tokens for carbon credits. The total number of carbon credits reflects the amount of carbon credits the registered projects on it qualify for. The carbon credit buyer enters into an emissions reduction purchase agreement with Carbon Chain International.
The company, Carbon Credits International offers up to 30% as revenue share for token holders through a revolving fund each time a new buyer enters the market.
A Carbon Credit Trade happens when a client holding the Carbon Chain Tokens enters into a contract with Carbon Chain International. If a client chooses to use their tokens to purchase carbon credits under Paris Accord, the actual carbon credits are valid for a period of one year per trade. At the completion of the trade, the tokens are returned to circulation.
A Members-Only Exchange is available for those clients who have participated in the Token Generation Event via Private Sale. This exchange is intended to contain tokens that have been purchased by carbon credit buyers via public exchanges. These tokens are offered at the completion of each Carbon Credit Trade to Token Generation Event -participants annually, and each participant has seven days to accept the airdrop. The tokens left over from the airdrop will be distributed to the participants, who have decided to accept them during the grace period. These project tokens can be exchanged with Carbon Chain International on an annual basis for tradeable Carbon Chain tokens proportionally to trading volume in the preceding year. The tokens can then be returned back to circulation in public exchanges.
The token is held by the clients in a software wallet, and traded in the exchange. The exchange is blockchain-powered, so it can be assumed to be a decentralized exchange.
There are two types of tokens created by the Carbon Chain -platform:
-Carbon Chain Token, which is a token that can be traded directly for carbon credits, symbol CCT. These tokens are exchanged directly for carbon credits.
-Carbon Chain Project Token, which is a token that can be traded for Carbon Chain Tokens, annually distributed to private sale participants. This token is a bonus mechanism, whose total amount depends on annual sales.
The roadmap
Carbon Chain acquires carbon credits in bulk directly from registered projects by investing in registered project developers. These investments will produce more carbon credits into circulation over time. These credits can then be circulated among the public via the Carbon Credit Exchange in form of Carbon Chain tokens. The company intends to operate a revolving fund, which grows each year with new carbon credits being issued for trading through investment in registered projects.
The ICO is divided to a private sale and a public crowdsale.
The private sale issues 121 million tokens, and the public crowdsale is worth 220 million tokens.
Token allocation goes as follows: Participants in the private sale get 22% of the total amount, the executive panel get 13%, founders get 7%, bounties and referrals get 6%, participants in the crowdsale get 40%, team gets 3%, partners get 4% and the company gets 5% for trading. The team and founders have a two-year lock period.
The budget allocation goes as follows: Advisors get 5%, marketing gets 10%, registration costs get 30%, Emission Reduction Purchase Agreement gets 15%, administration gets 15%, token developers get 4%, blockchain development is listed separately at 10% and business development gets 10% of the total budget.
My thoughts:
Reading the whitepaper, I get the picture that the author’s first language isn’t English. The concept is laid out in a confusing manner, and as a result it took me hours to properly read through the document. I certainly hope that the whitepaper is edited as soon as possible. Any serious investor will read through it before making their decision.
All in all, after finally understanding the mechanism behind the scheme running Carbon Chain, I find that the project is clearly ambitious, and the first of it’s kind. More importantly, it provides for a seamless way for retail investors to take part in carbon credit trading. This is especially important for people and companies in developing countries, or non high net worth individuals, who otherwise wouldn’t have an access to carbon credits at all.
As a platform, the project is currently the only scheme offering blockchain infrastructure for players in the carbon trading ecosystem. Assuming that the project is successful, it has a chance to emerge as a market leader in it’s segment.
The project founder can be attributed to experience in UN -accredited carbon auditing, being the founder of the only UN -accredited carbon auditor in the African continent. This gives encouragement for the bureaucratic performance of the project. Indeed, the company behind the platform is registered in the Seychelles, which in itself provides a flexible access to the African continent. Presence in Africa in particular is fundamentally important for carbon trading: Africa is set to industrialize this century with the World’s largest projected population figures. This means that a whole lot of economic growth and growth in use of energy is going to take place. Carbon trading schemes successfully implemented could mean that this growth is mostly ecologically sustainable. We are talking about markets consisting of billions of people, so this project has a potential for exponential growth.
In my opinion the ultimate success of the project depends on the technical team. Assuming everything goes as expected regarding the carbon credits, registrations and so on, development of the exchange and smart contracts governing the system need to be airtight. This is simply because if the project goes on the intended trajectory, the amounts traded on the platform would be ginormous. Huge volumes mean huge investments in tech.
All in all — make the whitepaper clear to read — I see great potential in Carbon Chain.
Website: https://carbonchain.org/
Whitepaper: http://carbonchain.org/wp-content/uploads/Carbon-Chain-White-Paper-21-Aug-BW.pdf
This article was created in exchange for a potential token reward through Bounty0x
My Bounty0x username is starwalkerz