Incentivizing Climate Action via Regenerative Cryptoecnomics

Transcript

[Music] foreign [Music] hi everyone great to be with you here in Paris at ECC I'm Marcus I'm a contributor at clementow and I'm going to share with you a little bit the realities of what's been going on in the carbon markets on chain to date we've heard a lot about carbon markets today so I'll try not to belabor the same points but I really want to emphasize some of the simple Concepts that underlie this Market as well as some of the real things that have been happening over the last year

and a half since on-chain carbon really took off around October of 2021. the first thing I want to emphasize is the need to scale environmental action in order to have a meaningful impact on the climate crisis the reality is that we are burning through our carbon budget very quickly and there's not much time left to get very significant climate action going carbon markets provided a mechanism for doing that but the historical infrastructure that's been used is quite Antiquated which I'll go into a bit more later and we've heard a lot about today but the reality is that we've emitted close to two trillion tons of carbon dioxide since the Industrial Revolution and we're emitting on the order of 40

billion tons every year and so the race is on to get large-scale emissions reductions as well as large-scale carbon removals going quickly to elaborate a little more on that this chart gives a demonstration an illustration of on the top the emissions reductions that are required to achieve a 1.5 degree C warming objective which is at this point pretty optimistic and on the bottom of the chart you see the need the growing need for carbon removals or negative emissions and carbon markets play a role on both sides of this on one hand they can incentivize changes to Industrial processes changes to energy generation and land use that will reduce emissions they can also be used to draw down carbon dioxide emissions that have

already gone up into the atmosphere uh in the past in particular I want to highlight some of the basic structure of this Market which we've heard a lot about but it may be a little confusing if this is your first exposure to carbon markets so this is a structure of the existing voluntary carbon Market in diagram form on the top we have the supply side which is where projects go and Implement some positive action that is going to either avoid or remove emissions that have already been emitted and this involves three key players the project developer is the group on the ground taking the positive action planting trees installing solar panels or whatever the particular methodology happens to be then you have a registry and the

registry sets out methodologies those methodologies are scientific documents that give a precise set of steps that the project needs to follow in order to carry out that particular form of carbon avoidance or removal and then third you have the vvbs the validation and verification bodies these are typically consulting firms or other organizations that have the expertise to go and evaluate a particular project in the traditional market today they typically fly out someone to physically look you know physically go and visit the project site often with a clipboard tape measure that kind of Technology so there's a lot of room for improvement on the supply side on the other hand we have the demand side and on the demand side the the

market is primarily structured around OTC deals I.E bilateral agreements where say a corporation wants to Source a hundred thousand tons of carbon credits they work with a broker who often has bought that from a Trader and there's a lot of inefficiencies on this side of the market and the technology being used is more similar to the way that stocks were traded back in the 1970s and 80s using phone calls and open outcry people hear about pricing through their social network rather than from a price feed and uh we're really focused at the project I work on clementow on this demand side these demand side issues and ultimately the purpose of the demand

side of the market is to connect people who have money and want to support climate action with projects who are taking direct climate action and need Capital to fund that I want to dig a little bit more into the different types of methodologies it's easy to gloss over this but each of these methodologies represents quite a bit of rigorous scientific work that's been done to identify a cost-effective and reproducible mechanism for avoiding or removing emissions on one hand we have the distinction between removal and avoidance both have an important role to play as we saw earlier on the the chart of emissions over time reducing emissions as quickly as possible has to be the number one priority because it is much

cheaper to avoid emitting in the first place than to go around sucking carbon dioxide out of the air or planting trees and making sure that they grow up to be strong and healthy and sequester a lot of carbon so avoidance plays a really important role that being said avoidance is limited in scale there's only so many trees to protect that already exist there's only so much renewable energy to install and so removals will will pick up a very important piece when we get to True scale of hundreds of billions of tons to trillions of tons which is what's going to be necessary to address that 2 trillion carbon debt that we started by highlighting in particular there's also a distinction between nature-based and

technology-based projects on the avoid inside technology-based projects range from installing renewable energy to Distributing clean cook stoves the idea with the clean cook stoves is that in many parts of the world people still cook with a traditional three stone cook stove where you basically light a fire under a pot and this takes a lot of time and also is a very inefficient way to heat and cook your food it's mostly done by women and girls the cooking and that involves a lot of time gathering firewood a lot of time cooking and has negative Health outcomes for the people in the kitchen suffering from the smoke inhalation so the idea with enhanced cook stoves is that you give out a device that burns much less fuel heats the food much more efficiently therefore reduces the amount

of carbon emissions from the burning of the fuel and also improves the the health outcomes and gives the women and girls more time to pursue education and otherwise better their lives on the technology-based removal side you're probably familiar with direct air capture which is the idea that you'll suck in air through a large industrial plant turn that suck the carbon dioxide out of that air and turn it into some form of permanent storage in a gas canister or underground in a geological Reservoir all of these methodologies serve a different role and there is no one Silver Bullet methodology that is large enough scale and cost effective enough to address the two trillion ton outstanding carbon debt let alone to to reduce the ongoing emissions just to give you a sense of where we are

today in the growth of the carbon markets on a per ton basis against that 2 trillion carbon debt we've issued about 2 billion tons of carbon credits ever so we're looking at something like a 100 to 1000x scale up that's going to be required in order to meet uh in order to address the outstanding carbon debt now as you've seen over the course of this morning uh there is a lot of activity going on in the carbon markets I don't expect you to understand this Slide the main point is that there are thousands of organizations that are trying to build Solutions in this space and let's just say it's not entirely clear yet what the best approaches are but it is clear that there's a lot of excitement energy and funding coming into this space and lots of different

approaches being taken so at clementow we're focusing on some specific opportunities that we see as low hanging fruit in the market to really Drive scale and adoption for this asset class and start getting toward the 2 trillion ton Target that we have for addressing the historical carbon debt just to reiterate we're going to focus in on the demand side there's a lot of back and forth about whether the big issues are on the supply side or the demand side in this market honestly there are problems with both um but the the real low-hanging fruit in our view are on the demand side on the supply side it's a hard scientific process it takes years it takes a lot of diligent work with scientists and experts to develop better

methodologies better monitoring systems and that work is ongoing but the reality is that if there is not demand to absorb that new Supply that's coming online at an ever-growing rate the project developers who are taking the risk right deploying Capital paying people on the ground to go and take a positive action they can be left in the Lurch without sufficient demand to absorb the supply that they're producing so we've heard a lot about the problems in the traditional market I'll just reiterate this a bit uh as I said the technology being used is pretty old school you're talking about six weeks off into Source you call a broker on the phone maybe shop around call a few different Brokers to get different quotes and then a few weeks later once

you've selected your credits you're going to get an invoice you fulfill that invoice with a wire transfer and finally you get a PDF in your inbox with the proof of your retirement activity let's just say there's a lot of room for improvement there and using blockchain technology at clementow we've been able to reduce that to as little as a few seconds you put in your credit card information or connect your wallet and you get a verifiable proof of retirement including a unique transaction hash with a link that you can share on social media or otherwise distribute in a much more transparent and verifiable way one of the other big issues is that when you're sourcing from a broker they give you a quote you don't know if that quote is actually a reasonable price and so you have to shop around

and ultimately this comes down to a question of liquidity how easy is it to buy or sell the underlying asset and at clementao we've created on-chain liquidity pools that allow anybody to buy and sell certain types of carbon credits at a known price using the traditional amm technology that we're all familiar with like sushi Swap and quick swap in as little as a few seconds and finally because all the transactions are on chain you can see a unique transaction hash that identifies your purchase or your retirement activity unequivocally so this is an overview of the ecosystem that we've built this stuff is all in production today you can go on to the website I'm going to show you in a

moment to purchase and retire carbon if that's interesting and to help you achieve your your sustainability goals so on the left side we have the carbon credit issuers these are the organizations that um these are the organizations that are off chain issuing credits such as Vera and gold standard and CLE middle has very little to do with that issuance process we're really focused on bringing those credits to Market and making sure that we can connect demand of various forms with that Supply so the first step there is a carbon Bridge you may have heard of toucan there's a variety of different organizations now that are bridging carbon credits or have plans to bridge carbon credits on chain

we built on top of that interoperable infrastructure to create liquidity and Market tooling that makes it easier to access those credits given the proliferation of different projects bridging credits it's really important that we have unified infrastructure for interacting with them then we have a Marketplace and liquidity pools that make it easy to access allow people to get in and out of positions and allow project developers to list and finally we have a unified retirement system makes it easy to retire the credits and the governance process that manages this whole system we're also building out a lot of Integrations we've done some on-chain Integrations with sushi swap for instance every time you swap there's an option to retire a small amount of carbon credits in a planet positive way

and finally we have some Data Solutions including a dashboard that gives unprecedented Market transparency into this into this Market the on-chain market so if you're interested in achieving a sustainability goal or making a positive impact we have a new Marketplace called carbon Mark where you can go on and in as little as a few seconds connect your wallet or use a credit card to retire carbon credits in real time using on-chain liquidity pools these are an example of some of the projects that you can support we have a wide variety of projects over 100 these are on chain right now available to retire today so notable achievements we brought about 20 million tons of carbon credits on chain from the traditional Registries of

which about 500 000 have already been retired we've also been using our decentralized governance system to issue forward deals I.E directly fund projects on the ground including a cook stove project and a forestry project to the tune of about five hundred thousand dollars and we intend to deploy several million dollars more from our treasury to directly fund projects on the ground and in total we've enabled 100 plus organizations to achieve their sustainability goals including alchemix Goldfinch a wide variety of nft projects as well as some small off-chain organizations like the Liechtenstein Bankers Association that's about it if you'd like to get in touch please feel free to reach out we're always looking for organizations that want to use our solutions to achieve their sustainability goals and

we're also in the process of soliciting um requests for for comment on new sources of carbon Supply as I emphasize we're really working on the demand side of the market so we rely on our partners such as the Bridgers and now there's a lot of excitement about on-chain Native issuance of carbon credits and we have an open RFP where on chain carbon credit issuers can come and be integrated into the infrastructure that we've built so that they can access to the demand side that we're bringing to the market can access those credits as well appreciate your time [Applause] we have time for one quick question if anyone

any questions okay great project so a big fan of climate out so quick question on the governing side of things right so what what kind of controls do you have in place to say prevent trading for credibility of certain projects so this can happen this is real and this is a known issue in the market so how do you how does the climber Dow governance prevent these assets from being traded in the market today it's a difficult problem what I well the approach we've taken to date is to allow the market to determine what the value of these credits are that's one of the reasons we think liquidity is so important so that if a

credit is undesirable there is a mechanism whereby the price can reflect the credibility of that credit because our governance process is public and anyone can be involved if there are issues with a particular issuer or a particular project those can be raised in an open and transparent way and we've actually taken actions in the past to remove credits that have been um deemed to be undesirable or inadequate from circulation by basically burning them out of the liquidity pools that we support in particular there was an old methodology from Vera called hfc 23 removal and it was called into question and we went through a governance vote and we destroyed all those credits that are in our Treasury thank you very much no more time for

questions [Applause] foreign