By Joe James
10/26/22 AT 5:20 AM
Although the ongoing climate crisis and its causes are now well-known, greenhouse gas (GHG) emissions still aren't coming down fast enough to avert the severe impacts of a 1.5 °C temperature rise. Add in other issues such as plastic pollution and biodiversity destruction, and it is clear something urgently needs to be done.
Most companies and employees want a sustainable workplace, but more environmentally friendly practices have been slow to appear. For example, an IBM survey of over 16,000 people in 10 countries found that only 21% of respondents considered their employers sustainable. But what can be done, and how can organizations be persuaded to do more?
Sustainability can be improved, but barriers remain
These days, most people are aware of the primary ways to reduce carbon emissions and improve sustainability. For example, the importance of recycling is well-known, and a lot of waste comes from businesses.
One solution was to ship plastic waste to places like China and Turkey, but once they banned imports, the recycling rate in the US fell from 8.7% in 2018 to 5-6% in 2021. This was also an approach that simply shifted the problem elsewhere.
Only 16% of plastic is recycled, with the rest buried in landfills, swept out to sea, or incinerated. All of which result in more methane, as it breaks down, and carbon when burned.
However, the most significant sources of GHG emissions are transport, power, and industry. In the United States, for example, those three sectors account for over 75% of all emissions. A figure generally mirrored elsewhere.
As with recycling, there are solutions and ways of reducing harmful output. The adoption of electric vehicles is promising but is not being rolled out fast enough. The use of renewable energy is predicted to increase by around 8% in 2022, but as the crisis in Ukraine and the resulting energy spike has highlighted, the planet is still heavily reliant on fossil fuels.
One method that has been gaining traction and showing results is using carbon and other ESG-related credits. These are tradable tokens or permits that allow a company to emit a set amount of, for example, carbon dioxide. This means a price is attached to emissions and other activities that harm the environment.
However, there have been problems there as well, with people questioning aspects such as how much difference they make, how things are priced, transparency, and numerous other issues.
An interesting approach to solving these issues is that taken by Changeblock. Changeblock's CEO and founder Billy B. Richards says, "Carbon and ESG related credits are one of the best options around for reducing greenhouse gases, in both the short and long term. There are other viable solutions out there, but part of the problem is that change costs businesses money. Credits are a proven way to persuade companies to reduce their emissions.
"However, ideas like carbon credits face issues as well. Putting a price on things that harm the environment is a great idea, but there is no truly efficient market that brings together credits and consumers of credits," Richards says.
"Currently, things are too reliant on traditional finance infrastructures, with unbalanced incentives and companies not trusting investments. The problem is that there are too many assumptions, and no one knows if the credits are really making a difference. This is limiting adoption."
Carbon and ESG credits could make a significant difference with the correct approach and market
When Richards was studying computational biochemistry at Oxford University, he met John Palmisano, the grandfather of emissions trading, who was part of the team responsible for the 1977 clean air act and the first 'emissions credit'. Together, they realized the advantages of smart-contract-based trading, decentralized finance, machine learning and autonomous sensing.
They knew that a future existed where traditional finance, artificial intelligence, autonomous sensing, and blockchain are perfectly harmonised to deliver better outcomes for environmental projects. So, they set out to create a new exchange that would be easily accessible to all stakeholders and formed Changeblock.
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"The UN, EU, and other established environmental organizations have hailed DLT as-well as other disruptive technologies as a solution to the trust crisis in environmental asset trading for years - and we knew how to make it happen," Richards explains.
Around this time, Carbon 12, a group of successful entrepreneurs, were looking to address the lack of capital and mechanisms to bring promising ESG-related innovations to market. They realized that carbon and other credits could create revenue streams much more easily, enabling companies to come to market in a fraction of the time and with higher success rates than had previously been the case.
"Changeblock was a specialist technology and innovation hub dedicated to delivering cutting edge innovations to environmental finance, so we were naturaly aligned in mission and purpose with Carbon12. We decided to join forces, and as a result, we now have an incredibly strong technology base and are equipped to meet the challenges in the carbon market."
Using DLT has several advantages. Profitability, quality and trust are improved by the enhanced automation, control, traceability, security and efficiency. Notably, the underlying mathematics allows uers to verify data has not been altered. Multi-party trust is improved by the distributed nature and holistic view. Lastly, the enhanced identity and opportunities realized from digital assets and enhanced identity enable new products and processes. The platform significantly reduces intermediation leading to higher returns for originators of the credits, and allows for true market making. Other platforms tend to have fixed prices, unlike the mechanisms available with smart contracts. Furthermore, the platform allows for trading all environmental assets, including things like plastics and nitrogen.
Richards adds, "The climate markets need to be more accessible, transparent, and trustworthy to mitigate the ongoing climate crisis. Finance needs to have an easier journey into the hands of those mitigating environmental catastrophe. Businesses need to be persuaded to reduce emissions, and credits are a solution that works in the short- and long-term."
There is an urgent need for something to be done about the environment, but change is costly or too slow in coming. However, thanks to the advances in DLT and peer-to-peer trading, carbon credits might finally be the answer.
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