CIBC, Itaú Unibanco, National Australian Bank, and NatWest Group have partnered to launch Project Carbon, a Voluntary Carbon Marketplace. The project aims to help the banks’ clients to achieve a net-zero carbon goal.
Due to climate change, many companies want to reduce carbon emissions and offset the negative environmental impact of their activities. Governments have also set restrictions and regulations on how much carbon a company can emit.
Under the 2015 Paris Agreement, the increase in temperature compared to pre-industrial levels will be limited to 2 degrees Celsius, but ideally 1.5 degrees. To achieve this, greenhouse gas emissions need to be halved by 2030. Hence an increasing number of corporates voluntarily buy carbon offsets, far more than might be required for compliance with local laws.
According to Verra, in 2019, the voluntary offsets market traded almost 608 million tons of carbon dioxide emissions, equivalent to taking 131 million cars off the road. Still, carbon offset marketplaces face various challenges.
Auditing and verifying carbon transactions is complex because it is tricky to track whether the carbon was truly not emitted. For example, a ProPublica report found that some forests were cut down despite receiving offset funding. Carbon offset marketplaces also lack transparency, are susceptible to double counting, and involve various middlemen in the process, which take up almost 30% of the value paid on the marketplaces.
Project Carbon is looking to address these concerns by supporting a transparent liquid carbon credit marketplace with consistent pricing and standards. Through blockchain technology, the project will enable the verification process and full traceability of any transaction back to the source of the credit, which helps address double counting.
“Tackling climate change is everyone’s job. We’re helping to find solutions and support our customers as they take action to transition to Net-Zero by 2050,” said the bank CEOs. “Project Carbon is a terrific example of how technologies such as blockchain can address existing barriers and make carbon offsets more accessible for our customers – as part of their broader plans to reduce overall emissions and achieve their own targets.”
The project will launch as a pilot in August. It is built on a private Ethereum platform with ConsenSys as the technology partners.
Singapore’s DBS Bank, SGX, Standard Chartered and Temasek are also planning to launch a project aimed at tackling carbon credit trading. The project, Climate Impact X, focuses on preserving natural ecosystems such as forests, wetlands, and mangroves. It aims to use satellite monitoring and blockchain.
Meanwhile, the InterWork Alliance is working with Accenture and others to standardize carbon offset blockchain tokens, and Spanish renewable energy Acciona launched a blockchain platform to trace the origin of green hydrogen.