The International Finance Corporation (IFC), the arm of the world Banktold Reuters on Wednesday that it will launch along with some companies a platform in blockchain for carbon offset trading, with the aim of attracting more institutional investors to climate-friendly projects in emerging markets.
The bet is that the use of blockchain – a digital database of information that can be shared publicly within a large decentralized network – will drive carbon offsets to a greater extent than more traditional methods.
These credits are used by companies and organizations to offset emissions when accounting for their carbon footprint.
They represent projects that offset emissions, such as planting trees or generating solar and wind power.
Several fintech companies emerged in the past year with the aim of turning carbon offsets into digital tokens, but the market has struggled to gain traction with companies and institutional investors amid concerns about the origin and environmental benefits of some of the traded credits.
IFC partnered with sustainable economy firm Aspiration, blockchain technology company Chia Network and biodiversity investor Cultivo to launch the Carbon Opportunities Fund, which will provide carbon offsets in blockchain.
With an initial $10 million, the fund will buy carbon credits from projects chosen by Aspiration and Cultivation, which will then be tokenized using Chia technology and tracked using the World Bank’s Climate Warehouse database.
“It will set a standard and benchmark for the market that makes it more likely that other institutional capital will follow suit,” said Steve Glickman, president of Aspiration’s international arm.
Glickman added that only about 10% of carbon credit projects currently meet the fund’s criteria.
Carbon credit markets are largely unregulated as governments have yet to agree on trade rules. Many countries and companies see offsetting as a way to help reach their net zero carbon targets by 2050, crucial to mitigating the effects of climate change.
The IFC fund has identified 250,000 to 300,000 tonnes of credits that can be purchased by the end of the year and is conducting due diligence on projects representing about 1 million tonnes of credits that may be available in the coming months.
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Source: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
