It started with A few years ago, a hackathon was held near Trafalgar Square in London. Raphael Haupt and James Farrell discussed how the growing popularity of blockchain and cryptocurrencies can help fight climate change. The result is Toucan, a project founded by two of his colleagues that aims to revolutionize carbon offsetting.
To understand what this means, we need to start with the voluntary carbon offset market. The logic behind it is very simple. Businesses and individuals need to reduce their carbon emissions, but there will always be a certain amount that cannot be quickly eliminated, at least in the short term. Carbon credits exist as a way to balance that out and reach net zero. By “retiring” credits, you can emit one ton of carbon and still technically remain carbon neutral. What those credits generate can range from simply reducing your own emissions to planting forests or funding the construction of hydroelectric dams.
But the system is currently a mess, managed by several closely linked private standards bodies, each running its own carbon credit registry. “This is an unregulated market, and it’s a global market,” says John Hoopes, also known as John X in the cryptocurrency community. He is responsible for Toucan's strategy. “Each of these standards bodies has different registries, different formats, different methodologies and credit definitions, and they also use different data models. They are not harmonized and they are not interoperable. It's very difficult to work together.”
Simply put, Toucans are market infrastructure. It bridges physical carbon credits in countless different physical registries and standardizes them by converting them into carbon tokens on one blockchain super registry. These tokens are aggregated into a “pool” from which users are given tradable crypto tokens. Toucan's first carbon pool is called BCT (Base Carbon Tonne) and represents a basket of different types of credits, such as those from tree planting and pollution reduction, to offset each tonne of carbon emissions.
By placing this system on one registry, Toucan aims to prevent double reporting of credits for projects and companies. The company can also categorize different carbon credit projects by their duration and quality, and tailor the types of tokens available to buyers' needs.
“Companies are trying to align offset activities with their brand. Maybe they want to do only nature-based solutions. Maybe they only want to do technology-based solutions. “Maybe they don't want to do something in Brazil or Indonesia or somewhere else where they're based,” Hoopes said. “With our system, you can create carbon he tokens for these categories.”
As just one example, the group plans to launch a new natural carbon ton pool. In this pool, all credits would need to come from nature-based projects such as tree planting, rather than from more questionable sources of emissions reductions. This system could encourage more people who are simply interested in cryptocurrencies to participate in carbon markets that have traditionally been dominated by corporate players seeking to balance emissions for PR purposes. It is expected.
