Those credits might be tied to a forestation project, say, or a new wind farm.īut three decades later, the carbon market is still largely unregulated and fragmented, with interested parties squabbling over criteria for inclusion and decision-making processes. The idea was to ascribe a specific cost of the environmental damage of CO2 emissions, and then enable companies to purchase carbon offsets, which were similarly cost-assessed based on their ability to reduce environmental damage. ![]() The voluntary carbon market was developed in the ‘90s as a means by which companies in industries ranging from air travel to banking to oil could, in theory, track and offset their CO2 emissions. Market prices swung wildly, causing mild panic among traditional carbon-credit issuers and buyers. But many of them were attached to low-quality, long-dormant projects that didn’t actually improve the environment, according to some scientists and watchdogs. And in October, millions of carbon credits started arriving on chain thanks to a campaign from another crypto environmental group called KlimaDAO. From there, the tokens would be stored publicly and safely, and could then be bought and traded like any other crypto asset, with the hopes of enticing prospective buyers who previously had no interest in the carbon credit world. Toucan’s aim was to create infrastructure to facilitate the buying of carbon credits, which would be retired and then placed on-chain in the form of a new token. By pushing carbon markets onto the blockchain-a public and decentralized database-they felt they could turbocharge the climate fight with crypto economics, provide a global infrastructure data layer, and force polluting companies to either pay higher prices for carbon credits or seek more environmentally friendly approaches to their businesses.Īnd upend the system they did-though not necessarily in the ways that they hoped. The traditional voluntary carbon market-in which polluting companies can pay for credits that fund emission-reducing efforts-was disorganized, archaic, and lacked incentives, Toucan’s founders argued. ![]() Last year, the startup Toucan launched with a bold vision: it was going to use the blockchain to upend the entire carbon credits system.
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