Satoshi Nakamoto may have disrupted the financial world by inventing Bitcoin, but it could be his blockchain creation that ends up saving the natural world. IBM is working with Veridium Labs to bring the blockchain to the carbon credit market. The technology has enabled cryptocurrencies to publicly log transactions across a decentralized network, but it could also help companies offset their impact on the environment.
“For years, we’ve been trying to mitigate environmental impacts at every point in the value chain, however previous solutions still presented significant complexities and costs,” says Todd Lemons, chairman of the Veridium Foundation. “Our work with IBM is the first step in dramatically simplifying the accounting and offsetting processes, and therefore ultimately helping reduce costs.”
The project comes as companies grapple with their ecological impact and aim to go fully renewable. Apple announced last month that its global facilities are now powered by 100 percent renewable energy, while Google reached a similar milestone in December 2017. Rather than hooking their servers up to a giant wind turbine, the companies buy renewable energy credits that matches the amount of energy used by the servers and sources the power itself from the grid. It’s a start, but that’s just one aspect of the carbon footprint. Veridium aims to offer a more all-encompassing solution.
“That is how those companies currently address the rather large footprints they have due to their server farm usage, etc. though electricity use isn’t the only footprint they have,” Lemons tells Inverse. “The process of measuring the footprints of all of their individual inputs and outputs is a complex and daunting one and therefore costly. Veridium’s token solution automates the carbon accounting (measuring), purchasing and offsetting process.”
Veridium’s solution uses IBM’s work on blockchain technology to create fungible digital assets, tradeable with fewer headaches. Companies purchasing carbon credits today have to work with third parties and measure emissions through a complicated supply chain. Veridium plans to issue tokens on the Stellar network to offset carbon, which other than reducing paperwork also means there’s a public ledger of transactions that makes accounting and ownership transfer far simpler.
Initial tokens will include Triple Gold REDD+ credits from InfiniteEARTH, linked to Veridium through the EnVision Corporation. The company’s Rimba Raya biodiversity reserve on Borneo in Indonesia is home to over 100 endangered species, and its 250 square miles make it the world’s largest private orangutan sanctuary. The credits back long-term projects that are aimed at addressing the causes of deforestation.
Bitcoin was criticized as an environmental disaster in December 2017 as its proof-of-work algorithm used around 32.36 terawatt-hours of energy per year, around the same as Serbia. The blockchain it helped to pioneer could end up tackling deforestation, which Veridium claims has led to the loss of 40 percent of tropical rainforests to industrial agriculture over the past 50 years, and help to mitigate the effects of humanity on the global ecosystem.