As tech giants like Google and Facebook announce plans to go carbon neutral by 2030, smaller businesses are doing the same. The only difference is that Innovative startups take intelligent approaches that are supposed to be more effective than those implemented by large, centralized companies.
For example, Ripple, a fintech company that allows banks, payment providers, and the digital asset exchange to send money over blockchainTo achieve this goal, Ripple has unveiled a number of initiatives that are largely based on blockchain technology.
Ken Weber, Ripple’s head of social impact, told Cointelegraph that Ripple is focusing on reducing its carbon emissions by making sustainable choices, buying carbon offsets and investing in carbon removal technologies. One of the first initiatives that Ripple committed to is a partnership with the Energy Web Foundation. A nonprofit that uses blockchain to accelerate low carbon energy systems. Energy Web Foundation and Ripple have developed “Energy Web Zero”, a new open source tool that allows any blockchain network to be decarbonised by purchasing “tokenized” renewable energy.
Tokenization of energy attribute certificates
According to Weber Energy Web Zero allows Ripple to buy renewable energy in the US, UK and the Philippines. This is done via Tokenized Energy Attribute Certificates (EACs), which serve as proof of purchase by the company for the acquisition of renewable energies.
Jesse Morris, commercial director of the Energy Web Foundation, told Cointelegraph that the Energy Web Zero app creates digital identities for real assets such as large wind and solar plants around the world. Once these assets are tied to a digital identity, this data is anchored in the Energy Web blockchain, which supports the Energy Web Zero application.. From this data, certificates for digital energy attributes are generated in order to represent renewable energies.
Morris announced that Ripple and the XRP Ledger Foundation, an independent not-for-profit, will be the first to use Energy Web Zero to ensure offsets are purchased for consumption in the XRP Ledger. “We use a blockchain to solve their own problems in a sense,” said Morris.
Blockchain benefits from CO2 neutrality
Interestingly, using blockchain to achieve carbon neutrality makes perfect sense because of the technology’s inherent transparency. Companies like Google can claim that they remove their carbon footprint by buying high quality offsets, but they do not disclose what the offsets are or how much.
A public blockchain network always has evidence of the transactions that are taking place. According to Morris, the Energy Web chain is an open source architecture. This means that anyone can download a client and interact with it or look for transactions: “Open source platforms are critical to transparency and trust, which makes all the difference here.”.
In addition, an open source framework enables the entire blockchain ecosystem to use the Energy Web Zero application for decarbonization. Morris noted that this is a goal as the app aims to encourage other blockchain ecosystems to start decarbonizing:
“Companies like Google and Facebook have impressive sustainability goals and can make decisions about how to achieve their goals. However, given the decentralized nature of blockchain communities, we cannot. Hence, using tokenized EACs on a blockchain network is a powerful way to get a decentralized ecosystem to buy renewable energy to offset energy usage. “
Tokenization and Blockchain Effectiveness?
Although the concept makes sense and has even been implemented by companies outside of the blockchain space, Tokenizing energy attribute certificates and installing them on a blockchain network can be challenging due to unclear regulations and a lack of industry standards.
Cameron Prell, climate markets attorney and vice chairman of the Sustainability Business Working Group of the InterWork Alliance, a non-profit group working to create global standards for tokenized ecosystems, told Cointelegraph that understanding whether tokenization is effective or not depends on whether the Assets are tied to real, credible and standardized carbon credits. Additionally, Prell mentioned that these token loans should also offer better liquidity and pricing than standard carbon loan instruments.
According to Prell Companies looking to make their transition to zero net climate commitments should treat their tokenized environmental data as an asset with a market-defined value proposition: “Establishing and maintaining such security requires generally acceptable standardization, asset classification systems, and climate accounting principles.” He added:
Afterward, tokenization enables companies to evaluate, track, and trade their net return from zero to both credibly achieve their goals and to guarantee and secure any number of financial instruments to aid in scaling. and fund these efforts. “
While that may be the case, according to Weber, the company is buying tokenized energy attribute certificates and holding them until they retire. “We don’t want to trade or swap them in any market,” he said.
Paul Gambill, CEO of Nori, a climate change startup using the blockchain, believes Weber believes this It is important to separate carbon credits from the payment method or trading mechanism. Gambill told Cointelegraph that Nori will allow anyone to purchase carbon certificates in the form of “Nori Carbon Removal Tonnes,” non-fungible tokens that buyers will withdraw immediately. The platform’s NORI token serves separately as a payment method or trading mechanism. According to Gambill, this will help avoid double counting carbon allowances, which are often traded on old carbon records.