One of the biggest obstacles and solutions to the climate crisis is reducing emissions of carbon in the atmosphere. Where exactly do blockchain and Web3 developments fit into this problem, and what do they remedy? I researched the latest developments on this important topic and interviewed the founder and team of KlimaDAO, a highly experienced team focusing on regulating carbon emissions in a voluntary, nongovernmental scheme.
KlimaDAO is helping to adopt carbon abatement or sequestration technology, deterring companies that want to offset their carbon footprint with CCs (carbon credits) alone, forcing them to perform emission reduction projects which fall into the category of “additionality”. First of all, KlimaDAO launched a carbon offset effort of reducing over 9 million tons of GHGs (greenhouse gases) last November. We know, more than ever before, crypto transactions are highlighted as contributing to global warming due to the processor power they use. KlimaDAO KLIMACoin is a token that can only be released from the Klima DAO Treasury through exchange of a BCT (Base Carbon Ton). These BCTs can be generated through the performance of emission reduction projects mentioned previously. In short, a cryptocurrency whose value is backed by real-world carbon reduction actions. This whole KlimaDAO mechanism of exchange and recording is being hosted on the Polygon layer 2 scaling solution, drastically reducing its consumption of energy and cost for usage.
Let’s go into the benefits of KLIMA Coin. Ecosystems like KlimaDAO always face the risk of going through periods of stagnation. In the question-and-answer section of this post, you will have more detailed information about how they manage the KLIMA token, not just for the core function of driving emission reduction, but also for supporting a market that could serve as a reserve currency.
Advantages of KLIMA Coin
- Has strong incentives for incentivizing green economy and carbon reduction “additionality”.
- Developed to serve as a reserve asset with a buyer of last resort.
- Built to provide users of Web3 access to the carbon offset ecosystem and experimentation with novel methods to disrupt this space.
It was a great opportunity to listen speak with the team about how they came up with some solutions to the climate crisis and sustainability problems. I am very happy to share my first-hand questions and answers. The new information brought by turning our heads to a side that we have not looked at much before for a moment creates other possibilities; first for ourselves and also for our planet.
What are the ultimate goals of KlimaDAO?
KlimaDAO is a collective of environmentalists, developers and entrepreneurs who aim to pool their knowledge and expertise to drive change in the carbon markets, today.
KlimaDAO is an evolving network coordinating the delivery of climate finance toward high-impact and validated sustainability projects which produce tangible environmental benefits.
1: Drive Climate Action
KlimaDAO incentivizes a new supply of Tokenized Carbon Tonnes (TCT) on the blockchain through the KLIMA token. By driving demand into Tokenized Carbon, it incentivizes carbon offset producers to produce more carbon credits, assisting the adoption of new carbon mitigating or sequestering technology, and disincentivizes companies wanting to offset their carbon footprint with only C.Cs, and forces them to perform environmentally-friendly actions.
KLIMA is the first building block for unlocking the carbon economy — an economy where more economic activity leads to an acceleration in planetary regeneration rather than more damage to our planet. Before, monetary incentives and environmental incentives aren’t typically aligned.
2: Become a Carbon-Based Reserve Currency
The KLIMA ecosystem and monetary policy are managed by the KlimaDAO. This way we guarantee transparent decision-making and long-term stability. In the long term, we can use this system to optimize stability, to transition to a global unit of account and medium of exchange. Currently, in the short term, we’re focused on growth and wealth creation, to incentivize users to join the new wave of carbon currency.
3: Facilitate the Climate Markets
The current carbon (and the climate in general) markets are illiquid, fragmented, inefficient, and opaque. Because of this, we feel that carbon tonnage is heavily undervalued, and is forced down because of these issues. By eliminating these issues, the true price can be achieved.
How does Klima DAO use blockchain technology to accelerate the appreciation of carbon credits?
Our article, KlimaDAO: A catalyst for innovation within the voluntary carbon market, provides a strong overview of this topic. Ultimately, Klima is leveraging a stack of DeFi technologies to reduce market fragmentation and accelerate the delivery of climate finance to sustainability projects globally.
What are the benefits of using KLIMA tokens
KLIMA tokens confer a number of benefits to their users:
- A potential hedge against future offset price increases.
- Granting the right to participate in KlimaDAO governance, including treasury management, partnership initiatives, and blockchain carbon market leadership.
- Alignment, via KlimaDAO, with the Taskforce for Scaling Voluntary Carbon Markets – working to catalyze a robust and efficient on-chain carbon market.
- Accelerating the delivery of finance to sustainability projects globally by driving demand and adoption of carbon offsets.
- Portfolio diversification with an asset linked to carbon markets, which historically have a low correlation to other asset classes.
- Easy exposure to the carbon market, which is set to benefit from the tightening of carbon emissions regulations worldwide.
- KlimaDAO empowers your NFT project to become a positive force in the fight against climate change. How?
Are NFTs bad for the environment?
NFTs in and of themselves are not bad for the environment; however, the infrastructure that specific NFTs utilize to be created may have adverse environmental impacts due to their energy consumption. This is particularly true for NFTs created on ‘Proof of Work’ blockchains. These blockchains rely on heavy computations to secure their network and thus consume significant amounts of energy. Importantly, these computations are occurring whether or not NFTs are actually being minted (or any activity is taking place) on said blockchains. Thus, it is only through the attribution of the network’s underlying emissions profile to on-chain activity that a link is made between NFTs and adverse environmental impacts. In contrast to Proof of Work, blockchains based on ‘Proof of Stake’ (utilizing collateral rather than energy to ensure network security), produce almost no emissions.
What exactly is “ Send A Love Letter to the Planet”?
Using Klima Infinity, the DAO’s carbon offsetting tool, individuals and organizations alike are encouraged to complete their first on-chain carbon offset, effectively removing emissions credits of carbon dioxide and other greenhouse gasses. In doing so, participants are also able to submit a personal message about their love for the planet, to be memorialized on the blockchain. Early participants in this campaign have already retired from the market over 2,500 tons of carbon via tokenized carbon credits, nearly double the emissions savings in Dubai during Earth Hour in the past 13 years (1,600 tons of CO2).
Lastly, Experience of KlimaDAO team
The core KlimaDAO team is composed of individuals with deep experience across the climate finance spectrum, from project development and financing, MRV, to trading/brokerage and emissions consultancy. Members have consulted on energy policy at a governmental level and worked with some of the world’s largest corporations to help them develop their sustainability strategies. Together, our experience is augmented by a growing community (nearly 50 contributors) who bring with them blockchain and sustainability experiences from around the world.
*I would like to acknowledge Vincenz Buhler for technical research and terminology with the creation of this article. Vincenz is COO and cofounder at DexGrid (dexgrid.io), another project in the Web3 space focusing on resilient and sustainable energy for communities in Puerto Rico. He previously worked as an engineering manager at SolarCity and Tesla Energy and offers consulting services for energy, software and Web3 brands.
