The voluntary carbon offsets market is a critical part of our solution for climate change. It is a global marketplace where companies and individuals could invest in climate solutions that are vetted by independent standards organizations, and its very existence testifies both to a deep commitment to climate action and a potential to link finance and capital markets to climate action. Furthermore, it is projected to grow significantly in the coming years: According to a recent McKinsey study, it is needs to grow by 15 times in the next decade and up to 100 times in this century for us to meet our climate goals.
Source: McKinsey Sustainability
The market, however, also suffers from some well-known issues: The offsets are spread out between the different registries of different standards organizations. This creates both duplication and potential for error and even fraud. They are traded over the counter between project developers, brokers, and buyers, making it difficult to find available offsets and their pricing. All this has contributed to creating a fragmented market with high costs and limited liquidity.
We believe the diverse landscape of the voluntary carbon offsets marketplace is a key strength, not a weakness. Therefore, any solution to improve it should also be a decentralized one that incorporates a wide range of participants. So we’re working on an open source blockchain-based directory of voluntary carbon offsets to improve visibility and transparency of this key market, as part of the Climate SIG at the Linux Foundation’s Hyperledger project.
The first prototype of what such a directory looks like is now live at offsets.opentaps.org with data from the Berkeley Carbon Trading Project, which collected data on all offsets from The Gold Standard, VERRA, ACR, and CAR. We will be extending this prototype to be a true, decentralized data registry based on blockchain where all market participants could contribute their data.
We’re also working on a peer-reviewed academic paper on how blockchain could address the needs of the voluntary carbon offsets marketplace. If you’re a participant in the market, please join the study by completing the online questionnaire, and let us know if you’re also available for an interview.