Web3 technology can help mitigate the impact of climate change, say experts

August 29, 2022

By Tsering Namgyal and Joe Pan

How the metaverse, NFT and Web3 are linked with the ambitious task of mitigating the impact of climate change might sound like a big task.

But these topics were discussed during an online panel last week attended by members and advisers of ImpactNFT Alliance, an organization that promotes social, cultural and environmental causes.

Candice Burin, a regional ESG expert who has been advising the corporate suite as a consultant and an in-house expert, believes that corporate adoption of voluntary carbon credits is currently being reviewed as many organizations will seek to reduce their carbon emissions and energy consumption leading up to 2025 and 2030 as they seek to offset their operational carbon.

Limitations to voluntary carbon credits include how they are validated and audited to prove that they are in fact fit for purpose and removing the carbon they claim they are, said Burin, who co-authored the Purple Paper for the ImpactNFT Alliance. “Clear, valid and recognized forms of certification of high-quality carbon credits will become key deciding criteria for organizations,” she says.

“I think what we have been doing in the past two years have been unpacking how the measurements, the data side of ESG, and how the management structures are going to work,” Burin says.

She said there are a lot of exciting projects around the world and it is just starting to heat up and come to full fruition in coming five to ten years.

Also discussed was CRED,  a carbon-negative token which is created when carbon credit is used to offset carbon footprint.

“On one hand, CRED rewards voluntary carbon offset and good behavior, on the other hand, CRED enables content creators and impact NFT projects to sell their works for rewards, therefore creating a circular economy in the metaverse,” says Arnold Hui, head of policy research and carbon governance at Carbonbase.

CRED also spurs the funding of high-quality carbon offset projects which are listed on its NFT marketplace. CRED’s vision and mission are ambitious and revolutionary, as it focuses on scaling the growth of the voluntary carbon market. It has a huge room for growth since its market cap of US$1 billion is tiny compared to $216 billion of the mandatory carbon market.

“Individuals and corporations can potentially turn the tide on decarbonization and in the fight for climate change,” says Hui, who is formerly the director of ESG policy for Hong Kong’s de facto central bank Hong Kong Monetary Authority’s Exchange Fund which has a portfolio size of over US$500 billion.

Speaking from experience as a former central bank insider, most mandates or Key Performance Indicators (KPIs) of central banks focus on employment rates and specific metrics on inflation.  Other public goods and externalities are often not under their radar, says Hui, who is also an adviser to ImpactNFT Alliance.

Therefore, monetary policies such as Quantitative Easing (QE) can result in unintended consequences such as widening wealth gap or overproduction of goods which inevitably leads to waste.

 “In contrast, CRED incentivizes good behavior and supports carbon offset projects with direct links to sustainable development goals (SDG),” he said. “Its tokenomics centers on rewarding and accelerating individuals and corporations for doing good and decarbonization, and that’s powerful and impactful.”

He told NFTMetta.com that he is keen on joining hands with impact NFT projects of all kinds to create a positive impact in the real world.

David Dao, Co-Founder and Chief Scientist at GainForest, a non-profit based in Zurich, Switzerland believes that despite the hue and cry over climate change, there is a long way to go for the carbon markets especially when it comes to standardization. Dao believes it is important to apply the standards of MRV (monitoring, reporting and verification) in the carbon offset markets.

“We don’t lack carbon credits what we lack is high-integrity carbon credits. Carbon credits that do what they say they do,” says Dao, who is also an adviser for ImpactNFT Alliance.

About the authors

Tsering Namgyal is the chief content officer and Joe Pan is the contributing editor at NFTmetta.com respectively.