How Nori compares to other blockchain and climate plays

Christophe Jospe
Oct 8, 2018 · 8 min read

Nori is on a mission to reverse climate change. We are using blockchain technology to create a new carbon removal marketplace. Our goal is to make it as simple as possible for people to pay for and get paid for removing carbon dioxide (CO2) from the atmosphere. Last month I wrote an appeal to buy NORI. When talking to investors I am sometimes asked:

Who is your competition and how are you different?

Philosophically, Nori doesn’t see the world through a competitive lens. Companies who are also innovating in the climate + blockchain space are “fellow travellers.” As a member of the Climate Chain Coalition, we look for opportunities of common overlap where we can accelerate drawing down carbon from the atmosphere as quickly as possible. All of our code is open source. If there is a piece of what we’re working on that helps other companies, or groups accelerating climate change reversal, our attitude is: “Great! More shots on goal.”

Our belief is that it is only through treating knowledge as non-rivalrous and building the infrastructure to be as widely inclusive, transparent, and accessible as possible, that the world can truly reverse climate change. We live at a critical time in which we can construct new tools that allow for greater cooperation amongst humans. Any approach that contributes to drawing down carbon dioxide from the atmosphere is something that Nori wants to accelerate with improved ways to estimate and quantify its removal.

It is safe to say that there is no one (yet) in the world doing what we’re doing—at least in the way we’re doing it and at our stage in development. Further, because it is such early days in the blockchain industry, no one approach has yet proven why it’s a more efficient way forward for the world to address the challenge of stopping and reversing the flow of carbon dioxide into the atmosphere using blockchain technology. Now is the time for experimentation, mindful learning, and building a globally connected community. That said, here is how Nori is different from the “competition.”

We are a market only for carbon removal

One NORI token pays for one Carbon Removal Certificate (CRC) which represents 1 tonne of CO2 removed. My colleague Ross Kenyon wrote a great article about why Nori needs its own token. I often use the waste management metaphor to describe what we we’re doing. If we think of CO2 as garbage then a world that is serious about fixing climate change is already committed to removing more than 1 trillion tonnes of garbage. The carbon markets today are still paying people to reduce their garbage production known as emissions reductions, but that same garbage may end up in the street anyway. It doesn’t balance out. Sometimes people claim that they would have created garbage just so that they can get paid to reduce it or claim to have reduced garbage multiple times. And because it’s not on a blockchain the garbage is not easily trackable. Nori is creating the first garbage collector to remove the waste that is already in the atmosphere. Or, if you are going to produce trash, Nori is building the software that gives you the agency to pay to negate it.

Overview of the lifecycle of the Carbon Removal Certificate

We’re not a platform for existing carbon markets

While we think that the carbon markets and Paris Agreement are good signals for a world that wants to act, we don’t think they go far enough in solving the problem. We’re fans of Blockchain for Climate and their promise to deliver on the Paris agreement’s ITMOs (International Transferred Mitigation Outcomes) with BITMOs (B for Blockchain). A recent Forbes article described how this platform could help governments meet their climate commitments. They are starting by tokenizing the architecture for the existing REDD+ market.

Unlike other cryptocurrency start-ups, we are not tokenizing existing offsets, which come from either the existing REDD+ markets or emissions reductions. Some of the new climate crypto issuers are inviting CO2 emitters to buy their tokens, often at very significant price premiums relative to the current market prices of the offset credits they propose to buy with their token sales revenues. Most of those offset credits are currently offered for sale, for pennies per USD$-equivalent token cost, on publicly accessible exchanges. (e.g. ICE and EEC.

Veridium is working to adapt the Hyperledger Fabric to enable IBM to track token-carbon credit transfers on Stellar’s blockchain.. They have also introduced a two-token system, in which a CARBON token is retired when an investor buys a VERDE token. The CARBON token represents a basket of emission offset credits that are listed on existing offset credit registries.

Carbonex has flexible model that introduces a CBN coin which equates to a tonne of CO2. CBN coins can be used on the Carbonex platform buy carbon offsets, emission reductions, or carbon removals. There is also a fixed number of ECO tokens with a purpose of limiting transaction fees on the platform.

These tokens do not treat carbon removal as a discrete market or treat one tonne as one tonne. In other words, while they do create a new digital asset, that new digital asset might be something that—going back to the waste analogy—allows token buyers to continue generating waste without necessarily causing anyone else to waste less. It’s a design that does not balance the trash in the street out to zero. They might also be using the fee collected from someone putting one ton of trash out in the street to pay for someone else to put one less ton of trash out (an emission reduction), but one that might not have an underlying value of one ton; or even be linked to a specific project.

We create methodologies and carbon accounting frameworks out in the open

Nori’s approach to creating a carbon removal marketplace is to build it from the ground up. This allows us to work with anyone. As long as an approach can remove carbon dioxide and does not present additional risks from doing so, a project will be able to use or develop a CRC methodology with Nori. Our intention is to build a platform that allows people who are removing carbon to find a way to monetize it using our marketplace. We do not rely on standards bodies or other project registries. While they may be backed with good intentions, standards bodies have also permitted scams, fraud, excessive middlemen fees, arbitrary certificates, and the sale of environmental activities that purport to have a face value higher than the underlying value.

Nori relies on science, transparency, and the open source community to improve the way the world can estimate and quantify carbon removal. For each type of project, Nori works with respected 3rd parties to establish a terrestrial carbon stock baseline and acceptable approaches to estimating and verifying carbon stock increases, relative to that baseline. Each methodology requires a way to establish a baseline that is public and has undergone peer review. For our first methodology, we are working with COMET-Farm as our baseline generator. Two months ago I wrote about baseline generators, and how they an integral part of the Nori market design for our first methodology.

We’re not creating a new blockchain

We are not creating a new blockchain as we are using the Ethereum platform, but we’re keen to see the progress in all ways to cryptographically secure data. Regen Network is building its own blockchain to verify ecological state protocols. This ecology specific language will create technologies that will help track how ecologies which previously created waste can turn indicators around. These same indicators can provide data around carbon removal. We’ve partnered with them to collect data through their future platform which would generate CRCs.

Other projects such as the ixo Foundation have created a model that generates an impact token for activities that relate to the Sustainable Development Goals (SDGs). The blockchain is secured by proof of impact and is stored on the Global Impact Ledger. IPCI (Integral Platform for Carbon Initiatives) is using the immutable ledger to track environmental assets and liabilities. Swytch has built a system that can verify through “Proof of Production,” which captures energy production data from IoT and smart devices has begun with building a platform to advance environmental markets, starting with solar.

We’re starting a marketplace in soil carbon sequestration

Nori is launching a methodology in an area that has haunted carbon offset markets for a long time. With our first carbon removal methodology, Nori intends to address an area of long-standing unmet demand. The Nature Conservancy’s recent report on “Carbon Market Incentives to Conserve, Restore, and Enhance Soil Carbon” found fewer than 20 projects in the world that reduce or sequestered CO2 in agriculture. Part of the reason for this is the high transaction costs and complex, costly, opaque but unreliable soil organic stock change estimation methods imposed by existing registries. Read about the more transparent and reliable soil organic carbon stock change estimation method that Nori is developing, along with COMET-Farm, here.

We have a unique way of facilitating price discovery and disclosure

Unlike our competitors who are tokenizing offsets, we have a unique way to discover price. Our goal is to have the price of the NORI token become a reference price for a CO2 collector who can convert the CO2 waste stream that is accummulating in the atmosphere into value-adding terrestrial carbon stocks. In our model, the way in which price gets discovered is through forward contract auctions. At least four times a year we will have an auction. Whitelisted (pre-approved) buyers and CRC suppliers who have projects listed on the Nori platform bid the price, in USD, that they are willing to pay for/accept in a CRC transaction that will take place on a specific future date. So, for example, an auction that could take place in April, 2019 might be designed to establish the price for CRC trades that might be executed on December 31, 2019.

The Nori Standard CRC Forward Contract will stipulate that payment at the time of CRC delivery will be as follows:

  • The buyers and sellers have agreed to a firm delivery price in USD.
  • If the market price for the NORI token is less than the agreed price on the fixed delivery date, then the buyer pays the CRC supplier one NORI token plus the difference in USD.
  • If the market price for the NORI token is higher than the agreed price on the fixed delivery date, then the buyer pays the CRC supplier one NORI token, and the CRC supplier pays the buyer 50% of the difference in USD.

This way, the price agreed in the Nori Standard CRC Forward Contract is, effectively, a floor price. If NORI tokens can be converted to USD for more than the agreed floor price, the CRC supplier and buyer share the NORI token price upside fifty-fifty.

This method should eliminate CRC suppliers’ downside price risk while ensuring that both parties to any resulting agreement get equal share in any NORI price premium that might emerge on the more speculative side of the new market we are building.

Want to dig in more?

If you’re a company or investor and have gotten to this point, and are thinking to yourself “this sounds great! How can I support this effort?!” well have I got the deal for you. You can buy a SAFT (that converts to a token) for $0.075 that you must first use to pay for a future CRC, or $0.15 which can be freely tradable. From the time when you buy it, it will be non-transferable for one year in compliance with Securities and Exchange Commission rules. Please fill out this form to let us know that you’re interested.

For more:

  • Listen to our podcast.
  • Review our webinars on different elements of the market design.
  • Read our white paper for technical details.
  • Not an accredited investor, but still want to support? Invest in the public campaign on Republic.

Nori

Nori is on mission to reverse climate change. This is our blog.

Thanks to Ross Kenyon.

Christophe Jospe

Written by

Chief development officer for http://nori.com @nori building a blockchain company to make it easier to pay to remove carbon from the atmosphere

Nori

Nori

Nori is on mission to reverse climate change. This is our blog.