What Are Tokenized Carbon Credits?

Tokenized carbon credits represent carbon that has been avoided or removed from the environment. One metric tonne of carbon verifiably avoided or removed translates to one carbon credit. They are created upon bridging carbon credits from voluntary carbon market registries onto the blockchain. 

Carbon credits are often integrated into sustainability strategies as a tool for organizations to compensate for net greenhouse gas emissions. Non-governmental organizations (NGOs) and carbon industry bodies develop independent criteria to verify these carbon credits and ensure their integrity.

Tokenized carbon credits can be utilized as a financial tool within cryptocurrency ecosystems, empowering individuals, corporations, and governments to access carbon as an investable asset. Tokenization also helps to improve liquidity within carbon markets – a space that has been driven by OTC transactions. Thus, using a blockchain ledger addresses a range of issues inherent to the traditional carbon markets: improved liquidity, access, transparency, pricing signals, and data standardization.

Author:

Raphael Haupt is the founder of Toucan Protocol, a regenerative finance Web3 protocol that enables people to put climate action at the heart of digital transactions. 

Toucan builds the infrastructure that brings carbon credits and planet-positive activity onto blockchains, unlocking innovation and financing for meaningful climate action at scale. Raphael holds a Masters degree in Industrial Engineering and Management from TU Berlin and Toulouse Business School