Intersecting carbon markets and Web3 for regenerative change
Aiding in the fight against climate change, Web3 mechanisms are proving to be a strong contender for growing the carbon market.
Web3 and the carbon market might’ve not been an intersection that most would’ve betted on. According to a recent report, every single Bitcoin transaction consumes over 1,173 kilowatt hours of electricity — energy that could “power the typical American home for six weeks.” The rise of Proof of Stake in the midst of the energy intensive Proof of Work, such as Bitcoin, has taken the industry by storm; carbon offsetting has equally seen mass adoption this year as those in this space are waking up to the importance of systems going greener.
Climate Action Needs Blockchain
Blockchain in itself has multiple ways of supporting climate action, mainly because it’s decentralized, and so it cultivates greater transparency.
Alexandre Gellert Paris, Associate Programme Officer at UNFCCC, says: “As countries, regions, cities, and businesses work to implement the Paris Climate Change Agreement rapidly, they need to make use of all innovative and cutting-edge technologies available. Blockchain could contribute to greater stakeholder involvement, transparency, and engagement and help bring trust and other innovative solutions in the fight against climate change, leading to enhanced climate actions.”
When it comes to carbon offsets, blockchain enhances the transparency, traceability, programmability, and tradability of those offsets. Regen Network has always been at the forefront of introducing natural climate solutions through Web3 adoption. Beginning their journey in 2017, they have been at the forefront of this space, building a platform for ecological regeneration; since then, a myriad of people have woken up and darkened the door of the Web3 carbon markets. Today, within and outside of Web3 projects, globally, people echo the narrative that those at Regen Network have been speaking for years. The world is waking up. This space is growing — and fast. The Earth doesn’t have much time left, and if we are to reach the sustainability goals by 2030, this market has the potential to catapult us toward these outcomes. But we need to collectively adopt the protocols, mechanisms, and narratives for these real-world impacts to effectively shift things in the right direction.
A Vision for a Healthy Planet
Regen Network’s mission is to be a global accounting system for ecological health and climate finance; therefore, the fact that blockchain is immutable, publicly verifiable, and decentralized is highly beneficial for their core purpose. They decided on a domain-specific blockchain rather than building on top of an existing blockchain such as Ethereum. They want their community to have control over the entire software stack.
The Ecocredit module is the first module that’s available under the recently launched Regen Ledger 2.0. This module allows for the ability to manage classes of ecosystem service credits, including carbon credits, and minting these credits through a batch issuance process.
Today, the entire carbon market, including many renewable energy credits, sits at $220 billion. Gregory Landua, CEO & co-founder of Regen Network, says that it’s safe to say that within the next decade, we’re going to experience a substantial jump towards $2 trillion (based on a 2017 study released by the World Economic Forum) in natural climate solutions alone; it’ll be even more significant if you think about renewables.
Web3 Holds the Keys for a Sustainable Foundation
Web3 serves as a proxy for innovative economic ideas, how the internet should be structured, and how individuals should participate in this value creation. It has opened the doors to open-source protocols collectively owned through crypto-economics. One of the details that makes blockchain technology so notable for renewable energy is that there is no chance of “double-dipping.” Carbon credits cannot be double spent or double-counted, a common occurrence on the traditional, centralized carbon markets.
Regen is a Layer 0 protocol, exceptionally robust and valuable for the emerging carbon market. Serving as a solution to the world’s largest problem, harnessing the tools and mechanisms that Web3 and blockchain hold to change the face of the climate. Regen Network believes that natural capital assets (ecological assets) will be the most critical form of the capital asset class in the 21st Century. “It might be a crazy thing to say in the crypto space, but it turns out it’s not a crazy thing to say in the rest of the world.” (Gregory Landua)
Carbon Market Leaders
The voluntary carbon market was structured to drive finance to reduce greenhouse gas emissions. This market has been pioneering new approaches for fighting climate change. Looking at some of the big players in this market right now, KlimaDAO stands out. Their launch was a “monumental inflection point at the interaction of crypto and carbon” (Gregory). Their treasury is backed by carbon credits alone, reaching a market cap of $1 billion in one week. That’s no small feat. Furthermore, the voluntary carbon market has seen a price increase of 25% due in part to the demand for carbon assets created by KlimaDAO. And they’re not alone in forking ecological assets and carbon into their treasury.
Celo pledged 40% of its collateral in ecological credits, such as carbon tonnes. They are also looking into conservation tokens. Regen Network has a partnership with Celo as well. Maker DAO has been going through a governance process to include renewable energy credits and carbon into their treasury. BasinDAO is a global DAO reducing and removing carbon, restoring and protecting nature and improving human health and wealth.
Quality carbon credits and solutions are needed in order to meet demand in the emerging market. Regen’s CarbonPlus credits are voluntary carbon credits, aiding in removing carbon and restoring natural grassland ecosystems. Managed grazing alone can potentially sequester 16.4–26 CO2e (Gt) by 2050. Regen Registry is a platform where one can get paid for regenerative ranch management systems. Livestock grazing alone covers 25% of the world’s land area. On the back of such expansive coverage, perhaps those farmers have a greater responsibility to do their part in regeneration and ensuring that the planet’s degradation doesn’t fall on their shoulders — instead, that they are at the forefront of combating the rapidly failing ecological health.
What Backs a Currency?
When we’re seeing the crypto market booming, with more currencies being listed than ever before, it’s no wonder that what drives those currencies forward is beginning to be questioned. When those in this space began waking up to the effects on the climate, having a currency that is in some way backed by ecological credits, has become not only a big step in the right direction — it has become a necessity.
When thinking about what backs a currency such as Bitcoin, the answer lies in computational power. Trust in that process of the competition between miners to get that next block will create that store of value and ability to turn. But according to Landua, neither of those is good enough. “They have to evolve.” And that’s precisely how to begin to get people to innovate by asking questions such as, “how do you back a currency with something that creates more public good or scrubs out or cleans negative externalities?” Gregory predicts that every single stable coin or currency that wants to be competitive will have some percentage of its backing in the form of ecological credit. That is not only driven by market forces but by planetary imperative. It’s something that we, as a civilization, have to do. Regen Network profoundly believes that we have to build a better future for generations to come — today.
Regen Network’s community is vast, including those from the blockchain community, ecosystem service community members, climate change community, and the science community.
Earlier this year, Gregory Landua gave a thought-provoking presentation at Cosmoverse in Lisbon, where he stressed the importance of carbon markets in the world’s ecological health moving forward.
Written by Mathilda DV