Carbon Reduction Initiative was founded in April 2020 with the goal of addressing Bitcoin’s environmental impact through an innovative new methodology to be approved by Verra.
We have come a long way, having our concept methodology note approved, writing a methodology, revising a methodology, revising a methodology again but we are still in the review process. We knew it would take a long time, but it’s taken much longer than we anticipated, mostly due to changes in the Verra team and process. It saps the team’s energy and makes it feel like we are making little progress.
We don’t want to be constantly waiting for Verra, we have an impactful roadmap we want to get started on delivering. We want to accelerate, not be stuck. So, over the summer the team have been reviewing our strategy, the outcome of which is pivoting immediately to the second part of our roadmap. The methodology finalisation will continue, but in the background as just a small part of the work we are doing.
CRI 2.0
Our aim is to create the world’s first tokenisation of future carbon credits, which we call Carbon Bonds. This is in contrast to many projects currently attempting to tokenise existing Verra carbon credits, which while a worthy long-term goal has 2 large problems:
- Its against Verra’s terms of service — this has already been a problem for Klima and Toucan, when their business model was shut down.
- Although tokenising existing carbon credits enables price discovery and transparency in carbon markets, it doesn’t scale carbon credit issuance by accelerating funding for climate change mitigation projects.
Our Carbon Bonds meet both tests. We will do more than tokenise carbon credits and profit, we will help scale carbon credit issuance markets by the 15x that the Taskforce for Scaling Voluntary Carbon Markets reported was required by 2030. Due to our knowledge of the arcane carbon credit issuance rules we have been able to construct a schema to do this within the existing rules.
Lets do this!
So how does the creation of Carbon Bonds work?
Our onboarding team will contact existing carbon credits project proponents registered with Verra to guide them through registering on our simple web interface. This interface will populate a profile that provide lots of key information to potential carbon credit buyers.
We will assess the risk associated with each carbon credit issuing project through reviewing previous issuance, project proponent experience and the detail of the project. Our review team will conclude by classifying the carbon credits produced into our taxonomy and rating those carbon credits in terms of quality and risk of non-sale.
These initial two steps already significantly reduce the information gap that buyers have to frequently fill with extensive, expensive due diligence when sourcing carbon credits to offset emissions.
Then the onboarded project is guided through the creation of NFTs representing each future carbon credit a project wants to issue through our Carbon Bonds. These NFTs can be bought directly by carbon credit purchasers and we will build automated systems to ensure delivery through the Verra registry upon verification. The NFTs will be issued at a discount to their final value to provide a yield curve equal to the expected inflation of carbon credits over their lifetime.
To facilitate trading that enables transparent price discovery, these NFTs can be “wrapped” into a locked pool via smart contract to generate fungible Carbon Bond tokens. It is also possible to “unwrap” these tokens back into the underlying NFTs. This will enable access to the cryptocurrency community and help fund the next generation of carbon credit projects we need to scale the voluntary carbon markets. Importantly, the fungible tokens will be backed by underlying assets with full transparency of the composition of those assets.
Conclusion
Carbon Bonds will be a new institutional grade crypto-primitive that enables greater funding, innovation and scaling for the voluntary carbon credit markets while aligning with Verra’s registry terms and conditions.
Get involved and unite against climate change!
Share it
