Computer giant IBM announced a partnership with the environmental fintech startup Labs Veridium, with the intention of releasing the cryptocurrency token on the blockchain Stellar.
The initiative, announced on Tuesday, is that IBM and Veridium will start trading carbon credits, which will allow companies that pollute the environment, to compensate for the damage caused. The proceeds from the sale of the token “verde” will be used to restore the rainforest on the island of Borneo in Indonesia with an area of 250 square miles.
“Carbon (carbon) credit is a commodity, like iron or oil”, and the market for carbon credits is one of the fastest growing in the world. There are voluntary carbon credits, such as those that buys any man, and the mandatory loans, which should buy the company, beyond the quota of pollution specified by the Kyoto Protocol.
Under the Kyoto Protocol, most industrialized countries agreed to reduce greenhouse gas emissions. Carbon credit sold on the stock exchange, you can buy it, if the government spent their allowable limit on carbon dioxide emissions. Carbon credits give the right to emit one ton of carbon dioxide equivalent. Accordingly, if the company exceeds the limit, it can offset the damage by purchasing carbon credit. And those who reduce emissions can earn carbon credits with the right of resale. According to forecasts, the demand for carbon credits will amount to 1.6 billion tonnes by 2020.
Carbon credit turns into a sought-after commodity, and the market, according to Fortune magazine, will reach $1 trillion in the next ten years and will be the largest on Earth, ahead of even the crude oil market.
Carbon quotas exist for a long time, but they are difficult to assess and to adhere to the traditional balance. Token Verde, by contrast, is interchangeable and can be bought and sold in the public network, Stellar, removing the opacity from the supply chain carbon credit.
“For many years we tried to eliminate the negative impact on the environment at every stage of the production chain, however, existed before this decision meant significant complexity and costs,” says CEO and co-founder of Veridium Todd Lemons. “Our digital environmental assets designed to help companies and institutional investors to buy and to use quotas on carbon emissions, to mitigate the impact on the environment and to protect humanity from the potential risks in the future.”
It is noteworthy that the initiative is not just a proof of concept or pilot program. Building on previous partnerships with IBM Stellar, the credits will be sold through a public network Stellar, which will allow the program to achieve global coverage.
“Using public is permitted in the network of the blockchain, we can help Veridium to create a new sustainable marketplace, which is good for business and good for the world,” said senior Vice President of IBM’s industrial platforms and blockchain Bridget van Kralingen.
“In this case is a much more efficient and transparent approach to carbon accounting and compensation, which will allow individuals and companies to play a role in improving the environment,” she concludes.