By now most of us have heard of Greta Thunberg, the 18-year-old climate activist revolutionising the way we think about climate change. Since the age of 15 she has challenged world leaders to take action for climate change mitigation, and this year’s Conference of the Parties has been no different.
November 3rd, 2021 — Finance Day at COP 26. One of the most highly anticipated topics at the summit; and at the top of the agenda, carbon credits.
Needless to say, Greta was extremely vocal about the proposed scaling up of carbon offset schemes, emphasising their greenwashing capabilities which allow the fossil fuel industry to conduct business as usual.
A string of tweets summarised her views, namely describing offsets as the ‘get out of jail for free card’ for ‘polluting profiteers’. She also stated that ‘offsetting is often hypocrisy’ and ‘often a dangerous climate lie’.
And she’s right. The climate markets are broken…
The climate markets as we know them have not met the standards necessary to reach are desired climate targets and here are the reasons why.
The Climate Markets are Overly Intermediated.
Carbon markets are constructed by a transnational network of economic agents (economists, scientists, engineers, policy advisors, parliamentarians, etc.) and complex technologies (computers, global positioning system satellites, factories, gasses, accounting systems, etc.). This overly complex web of intermediaries and technologies results in a highly unreliable marketplace with low accountability and poor transparency, not uncommonly leading to the double issuance and/or spend of carbon credits.
The Climate Markets Have Led to Unjust Development.
Carbon trading came with a promise to be a new mechanism for sustainable development; yet, currently, its benefits are not widely shared. As a consequence of the highly intermediated credit purchasing process, project developers rarely receive the true value of their credits, with profits accumulating back at the top of the tree.
The Climate Markets are Corrupt.
The climate markets have been highly susceptible to fraud, for example, ‘missing trader fraud’ in the EU Emissions Trading Scheme — the theft of value added tax (VAT) — was reported to have cost the public purse more than €5 billion in lost VAT revenues. Additionally, individuals and businesses are often sold carbon offsets from trees that haven’t been planted and turbines that haven’t been built, which compromises the integrity of the carbon markets. Lastly, given the significant sums of money involved, there is incentive and potential for manipulation of carbon measurements to exaggerate results and increase payments.
Climate Markets use Low Quality Methodologies.
There is a distinct lack of standardisation for the verification and certification of carbon credits. Methodologies often fail to take into account the complexity of the carbon cycle which can vary geographically and by sequestering agent. Poorly constructed methodologies coupled with the speculative nature of carbon dynamics has the potential to create an unstable market of subprime carbon, again compromising the effectiveness of the carbon markets.
What is Changeblock doing about it?
Changeblock is the solution to these problems. We mobilise the benefits of blockchain technology and decentralised finance to create a robust and transparent environmental asset trading platform that can be accessed by anyone.
By using the peer-to peer architecture of blockchain technology, Changeblock allows environmental assets to be transferred and tracked worldwide, without the need for any middle-man or intermediaries or central server. For our users it’s all about impact. By reducing the complexity of the environmental asset trading ecosystem and increasing transparency, Changeblock is able to significantly improve reliability and integrity while delivering real value to the environment and project developers.
Ultimately, the Changeblock platform provides what all carbon market participants want, but currently cannot get: transparency, quality, liquidity, and stability.
A special thanks to Charlie Terry our Chief of Staff for writing this article. This piece was written as an illumination of the background conditions that helped to form the Changeblock platform.