The world of sustainability is becoming increasingly familiar with applications for fintech innovation, as well as the idea of markets putting a price on carbon. What we had not seen, until now, is a clean cryptocurrency that combines the two — provided in the form of a tradable token on a public blockchain, that is officially credited against certified rainforest projects — and can therefore be used to offset your carbon footprint.
The Universal Protocol Alliance (UPA) — a coalition of leading blockchain companies including Bittrex Global, Ledger, CertiK, InfiniGold and trading platform Uphold — has announced the launch of Universal Carbon (UPCO2). UPCO2 is the world’s first tradable carbon token on a public blockchain that can be bought and held as an investment, or burnt to offset an individual’s carbon footprint.
With demand for carbon credits outstripping supply by a factor of 4 to 1 in 2020, according to the World Bank, the UPCO2 Token is being described as set to democratise an important new asset class, which could lead to the establishment of a global clearing price for carbon (as today exists for such commodities as oil and gold) and more resources going into environmental projects.
Each UPCO2 Token represents one year-tonne of CO2 pollution averted by a certified REDD+ project preventing rainforest loss or degradation. Every Token is backed by a Voluntary Carbon Unit (VCU), a digital certificate issued by Verra, the international standards agency, which allows certified projects to turn their greenhouse gas (GHG) reductions into tradable carbon credits.
Projects supported through carbon credit purchases prevent deforestation in the Amazon, Congo Basin and Indonesia, plus other threatened rainforests, which is a popular proposition, explains UP Alliance Chairman, Matthew Le Merle:
“For a new generation of investors looking for more than mere financial return, UPCO2 offers attractive social, economic and environmental benefits. At a key moment for climate change, UPCO2 allows people worldwide to do good for the planet and potentially do well for themselves.”
Powerful macroeconomic forces underpin the Voluntary Carbon Credit market and, according to some commentators, could drive up prices significantly as more countries introduce regulated CO2 markets, forcing companies to compensate for their pollution. Additionally, a growing number of firms and individuals are choosing to offset their carbon footprints voluntarily.
According to the World Bank, in 2020, humanity compensates for just 22% of global emissions through the purchase and retirement of carbon credits, and yet the proportion of countries operating regulated carbon markets has risen from 40% of global GDP in 2016 to 70% in 2020. The result is a wall of demand that may far outstrip the production of new carbon credits, which some consider choked by the slow and expensive process of Voluntary Carbon Project certification.
The timing is apt, suggests JP Thieriot, Co-Founder of the UP Alliance and CEO of Uphold:
“This year may go down as the key inflection point for climate change — the year it went from a far-off issue enshrined in distant accords like Kyoto and Paris, to an existential threat affecting the lives of tens of millions of people.
“We’ve seen Australia and California on fire, ever-more powerful hurricanes, the US President-elect Joe Biden announcing a Climate Administration, and companies such as Apple, Microsoft, and Nike voluntarily committing to carbon neutrality.
“Combating climate change is likely to become the dominant economic issue of the next 20 years. The UPCO2 Token allows people everywhere to participate in this hugely important — and potentially lucrative — new market, as well as do the right thing for the planet.”
Voluntary carbon credits, which back all UPCO2 Tokens, offer major economic advantages compared with regulated credits. As dollar-denominated, globally-recognised, fungible and perennial assets, voluntary credits last forever, maintaining option value, until consumed or retired by a company or an individual seeking to compensate for carbon footprint.
Mainstream access is key to the tokens potential reach, concludes Mr Le Merle:
“We believe that the UPCO2 token has an important role to play in democratising access to carbon credits, which could eliminate price arbitrage and produce a single global price. This was a lightbulb going on for me. Combine a digital asset with a rainforest carbon offset and give everyone in the world access. How could that not be a great idea?”
InfiniGold and the UP Alliance
The vision of the Universal Protocol Alliance (UPA) is that every asset class will be digitised and tokenised, ushering in a new era in finance. UPA is an alliance of like-minded cryptocurrency companies and blockchain pioneers including Bittrex Global, CertiK, Fifth Era, Hard Yaka, InfiniGold, Ledger, and Uphold.
Australia-based digital commodities tech platform InfiniGold is a partner to the UPA, specialising in gold and other precious metals. A spinout from RoZetta Ventures and part of the RoZetta Group, (formerly Capital Markets CRC), the technology underpinning InfiniGold’s digital gold certificates is co-developed with other RoZetta Institute companies. It is also used to issue electronic cash and for the trading, clearing and settlement of unlisted securities. The core InfiniGold team previously developed SMARTS, the global leading market surveillance business that was acquired by NASDAQ in 2010. InfiniGold’s own product suite of ESG-compliant commodities is also set for imminent launch.
Further Reading:
- More about the Universal Protocol Alliance (UPA), a coalition of blockchain pioneers;
- More about InfiniGold, a leading precious metals digitisation company;
- More about the Uphold trading platform;
- More about the UN-REDD Programme;
- Also on SustMeme, Digital Energy Currencies: Blockchain Meets Cleantech;
- Also on SustMeme, Need for a Green Lining: ‘Cloud for Business’ in The Times;
- Also on SustMeme, Are digital payments a more sustainable way to shop?
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