As the blockchain industry continues to evolve rapidly, existing platforms have taken steps in line with sustainable energy goals. Earlier this year, Ethereum ditched its PoW consensus mechanism to switch to a more environmentally friendly PoS mechanism.
Another blockchain platform, Ripple, is taking bold steps in this direction. During Ripple's annual Swell conference held this past November, speakers discussed how blockchain and cryptographic solutions for enterprises are real use cases.
Ken Weber, Ripple's SVP for Social Impact and Sustainability, explained the role Ripple can play to improve “the transparency, accountability and tracking of greenhouse gas emissions” in support of global climate goals.
One of the panelists at the Swell conference was Mark Herrema, CEO of Newlight. Mark explained how Newlight has harnessed the power of blockchain to push the use of carbon-negative materials for various industrial use cases. Newlight is currently working on carbon credit certificates that represent one metric ton of greenhouse gas.
Corporations and institutional buyers wishing to offset their residual emissions can purchase these credits. However, Mark Herrema explains that not all credits are created equal. For this reason, their price must be different. Mark sees a future where carbon credits will be less commoditized, more differentiated and more value-added. He explains:
Just as there is massive differentiation between stocks, there is also for carbon reductions. One of the things that we think are very important about blockchain, and Ledger XRP in particular, is the ability to differentiate and have an identified value for carbon credits. I think this is an important aspect for the development of the carbon market.
The future of carbon credits
Reilly O'Hara, head of carbon finance partnerships and aftermarket operations at CarbonCure Technologies, also shared his insights on the future of carbon credits during the Ripple swell conference. CarbonCure envisions a new wave of measurement, reporting, and verification (MRV) by leveraging the capabilities of blockchain alongside other emerging technologies such as remote sensing/IoT, satellite imagery, and machine learning/AI.
The main objective remains to move away from low quality carbon credits towards higher quality, permanent and verifiable carbon credits. Speaking about this, CarbonCure's Reilly O'Hara explained:
I think this is where Ripple emerged as a leader. But 50 gigatons means that we need 10, 50, 100 Ripples and they have to invest in ten thousand CarbonCure and Newlight. It will take big bets and investments to get these technologies off the bench and removing carbon from the atmosphere on a large scale by 2030-2050.
Ripple is among the forerunners of blockchain and cryptocurrencies in the fight against climate change. The company has also set aside $100 million to voluntarily scale up carbon markets.
Ripple believes its funding will help accelerate the removal of carbon credits and modernize carbon markets through innovation and investment. The firm is planning to build a portfolio of long-term, additive, science-based carbon credits that meet Ripple's commitment to go net zero by 2030.