Yesterday Verra, the Washington-based non-profit that sets voluntary carbon credit standards, said it is immediately stopping the practice of creating blockchain tokens or instruments based on retired credits. Many blockchain and crypto platforms that offer tokenization use Verra registered carbon credits and mark the credit as ‘retired’ on the registry before creating a token to prevent double spending. However, some leave the credit active.
Typically carbon credits are used by companies to offset their carbon emissions. Verra is concerned that the ‘retired’ classification is meant to indicate that the carbon credit on the registry has been consumed such as through offsetting, and this blockchain practice creates ambiguity. Instead, it wants to explore “immobilizing” credits to address both the double counting issue and enable transparency and traceability, provided it “can be done in a way that prevents fraud and upholds environmental integrity.”
The fraud issue is a fair point, as the fact that carbon tokens are Verra registered is used as a promotional feature. Hence Verra plans to launch a consultation that will explore crypto key custody, KYC checks on issuers and holders, and potential fees.
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