Tokenized Carbon Removal? Ripple and Environmental Impact
XRP Ledger may soon become a go-to platform for carbon credit tokenization. Ripple focuses on enviro-tech startups to help them offset climate change.
Blockchain and climate change may sound like vastly different and unrelated topics. As it turns out their intersection can provide interesting new possibilities for removing CO2 from the atmosphere. Ripple (XRP) and their XRP Ledger are partnering up with environmental startups to offset the global carbon footprint and become carbon neutral by 2030 or sooner.
Because of this, XRPL may become the leading blockchain platform for transparent tracking and verifying carbon credits. Let's dive into more detail.
TL;DR:
- Ripple supports CO2 offset by investing $100 million into carbon removal startups by pre-purchasing almost 120,000 carbon credits.
- Each carbon credit is a representation of 1 metric ton of CO2 removed from the atmosphere and stored in an inert environment.
- XRLP has been chosen to build a global carbon credit tokenization platform facilitated by Xange.com and the United Nations.
- Carbon credit tokenization can provide transparency, faster transactions, automatic validation, and make purchasing available to the greater public.
Carbon dioxide emissions are one of the key factors in driving climate change by increasing the greenhouse effect. Many startups have emerged to innovate in the field of carbon capture technology to try and offset these negative effects. However, environmental technology lacks sufficient funding to properly scale and attract new talent. That is also why Ripple has committed $100 million in funding to support new and established carbon removal projects. Often these companies are issuing what is called "carbon credits" to represent metric tons of removed CO2 from the atmosphere.
Carbon credits can be purchased by enterprises, non-profits, funds, and other entities to help fight climate change on their behalf. Here is where blockchain comes in - by tokenizing carbon credits on a decentralized public ledger (such as XRPL) we can prove their authenticity and ensure that the promised CO2 was actually removed.
The XRP Ledger is suitable for this kind of use case as it offers fast transactions, minimal fees, and a consensus protocol that eliminates energy-intensive mining as known from Proof-of-Work chains. The Ledger itself is almost carbon neutral and Ripple, the company behind XRPL has pledged to reach net-zero carbon emissions by 2030 or sooner. Furthermore, Ripple announced in 2022 its plan to pre-purchase almost 120,000 carbon credits from BC Biocarbon and CarbonCure, representing around 120,000 of removed carbon dioxide.
Carbon Credits for Change
These environmental startups that Ripple supports each have a unique way of capturing and storing CO2. By purchasing carbon credits, other entities are directly funding the active removal of carbon dioxide. For example, BC Biocarbon focuses on transforming biodegradable biomass into solid carbon products through a method called slow pyrolysis. Their proprietary biorefinery process maximizes carbon capture from biomass, producing biochar and other high-value chemicals. This stable, long-lasting carbon can then be used in various applications, helping to mitigate climate change by locking away carbon in solid form.
Another startup - CarbonCure injects captured CO₂ into fresh concrete, where it undergoes a mineralization process and becomes permanently embedded. This not only reduces the carbon footprint of the concrete but also enhances its overall performance. Their approach provides both economic and environmental benefits, promoting sustainable practices in the construction industry.
Carbon credits can be represented on-chain as an NFT, which could enhance the overall transparency of the carbon credit market and make it more accessible to the wider public. Conducting these purchases entirely on-chain using smart contracts also reduces the need for intermediaries, such as market makers and authenticity verifiers. Of course, such services will still be needed, however automating them should cut transaction costs and make the process much faster.
Xange, a climate-focused fintech company is working together with the UN to build a carbon credit solution on the XRP Ledger. Central to this collaboration is the implementation of a voluntary carbon credit infrastructure that supports projects like the African Great Green Wall Initiative. This project aims to combat desertification-a pressing issue across the African continent. By leveraging the technological prowess of XRPL, Xange plans to issue tokenized carbon credits. These credits will be anchored in projects that are not only environmentally significant but also crucial for the socio-economic development of the regions they encompass.
Why is Carbon Capture Essential?
Climate change, driven by increasing concentrations of greenhouse gases like carbon dioxide in the atmosphere, presents significant risks to global ecosystems and human societies. Carbon capture and storage (CCS) technologies are critical because they address these challenges directly by removing CO2 from the atmosphere and storing it securely. This process is essential for mitigating the worst impacts of climate change, including extreme weather events, rising sea levels, and biodiversity loss.
The Intergovernmental Panel on Climate Change (IPCC) has emphasized the necessity of carbon capture in achieving the Paris Agreement targets of keeping global temperature rise this century well below 2 degrees Celsius above pre-industrial levels, and pursuing efforts to limit the temperature increase even further to 1.5 degrees Celsius. Achieving these targets without CCS would be significantly more challenging and costly, as many sectors of the economy emit CO2 as a byproduct and cannot be easily decarbonized.
