There is a global consensus that greenhouse gas (GHG) emissions are warming the planet, but efforts to accurately measure, report and verify these emissions continue to challenge researchers, nonprofits, corporations and governments.\u00a0<\/p>\n
This is especially the case with \u201cnature-based\u201d projects to reduce carbon dioxide levels, like planting trees or restoring mangrove forests.<\/p>\n
This has inhibited the development of a voluntary carbon market (VCM) on which carbon offset credits are traded. These \u201coffsets\u201d are sometimes viewed as licenses to pollute, but VCMs overall are thought to be beneficial to the planet because they help quantify the environmental impact of industrial and consumer activities and, at least indirectly, motivate companies to curb emissions.<\/p>\n
However, VCMs have recently come under intense criticism. A nine-month investigation by the United Kingdom\u2019s Guardian newspaper and several other organizations found <\/a>that more than 90% of \u201crainforest offset credits\u201d approved by the leading certification firm Verra \u201care likely to be \u2018phantom credits\u2019 and do not represent genuine carbon reductions.\u201d<\/p>\n This finding shook the carbon trading sector, but it has also spurred some new thinking about ways to measure, report or verify the efficacy of carbon-reduction projects. Digital monitoring, reporting and verification (dMRV), for example, largely automates this process, making use of new technologies like remote sensing, satellite imagery and machine learning. DMRV also uses blockchain technology for traceability, security, transparency and other purposes.<\/p>\n All this is still new, but many believe dMRV can reinvigorate carbon markets following the Verra scandal. It can also compensate for a shortfall of human auditors and inspectors available globally to assess GHG projects, especially the more problematic \u201cnature-based\u201d projects. In addition, it can gather a broader range of data and potentially make it available in real time. Importantly, it will allow a global comparison of projects for the first time.<\/p>\n \u201cDMRV will make a huge difference here, since it moves the quantitative comparison of various nature-based interventions onto a global field where they can be comparable with each other \u2014 something that is not possible in the current systems as projects self-report against their own baselines,\u201d Anil Madhavapeddy, a professor at the University of Cambridge and director of the Cambridge Centre for Carbon Credits, told Cointelegraph.<\/p>\n Some go even further. \u201cDigital Measurement, Reporting, and Verification (dMRV) technology has the potential to revolutionize the way the voluntary carbon market (VCM) operates,\u201d declared<\/a> dClimate, a decentralized infrastructure network for climate data, in a March blog post. <\/p>\n Still, questions remain: Maybe this is all too little, too late for averting climate change? And if not too late, won\u2019t progress stall if better methodologies aren\u2019t developed, like quantifying how much a Brazilian rainforest reduces global carbon? Are blockchains necessary for the process, and if so, why? And can dMRV really \u201crevolutionize\u201d voluntary carbon markets, or is this just excessive hyperbole?<\/em><\/p>\n \u201cIt is not too late,\u201d Miles Austin, CEO of climate tech firm Hyphen Global AG, told Cointelegraph. \u201cWe find ourselves at a pivotal moment.\u201d The Verra scandal and continued allegations of \u201cgreenwashing\u201d on the part of corporations have made more companies leery of supporting carbon-reduction projects.<\/p>\n \u201cThe perceptions of trust and feasibility associated with nature-based assets, both within the public and private sectors, have been adversely affected,\u201d Austin noted. But he added that at this critical juncture: <\/p>\n \u201cDMRV can have a significant impact to not only improve these markets but save them.\u201d<\/p><\/blockquote>\n It might be helpful to compare dMRV with traditional MRV, which aims to help prove that an activity \u2014 like planting trees or scrubbing smokestack emissions \u2014 has actually occurred. It is a prerequisite before a monetary value can be attached to the activity, and a necessity for carbon trading markets to work.\u00a0<\/p>\n MRV has been \u201cunderpinning\u201d sustainability reporting for years, Anna Lerner Nesbitt, CEO of the Climate Collective, told Cointelegraph. However, \u201cit has a lot of weaknesses,\u201d including a high reliance on subjective data, steep costs, lengthy timelines and a dependence on \u201cinternational experts\u201d \u2014 i.e., consultants.<\/p>\n Magazine:\u00a0Recursive inscriptions: Bitcoin \u2018supercomputer\u2019 and BTC DeFi coming soon<\/a><\/em><\/strong><\/p>\n According to Cambridge Centre\u2019s Madhavapeddy, the inherent difficulty with quantifying nature-based projects \u201cis that the conventional mechanisms for doing so \u2014 over the past decades \u2014 have been very manual and hard to compare across projects.\u201d<\/p>\n Quantification mechanisms used for these assessments are far from being standardized. They include assessing \u201cadditionality\u201d (i.e., what\u2019s the net difference climatewise of a project?), permanence (how long will its effects last?), and leakage (did a negative externality, like cutting down a forest, just move somewhere else?).<\/p>\n DMRV, said Nesbitt, relies on emerging technologies and more granular data for \u201ca fully digitized MRV protocol that not only collects digital data via Internet of Things, sensors and digital technologies but also processes and stores data on a fully digital and decentralized blockchain ledger.\u201d<\/p>\n DMRV can also potentially reduce the workload of auditors and inspectors called upon to validate emissions-reduction projects, according to Daniel Voyce, chief technology officer of sustainability-focused solutions provider Tymlez, who wrote<\/a>: <\/p>\n \u201cWith manual MRV recording each auditor or inspector might only be able to verify 150 projects each year due to chasing down the data they need and having to collate it all.\u201d\u00a0<\/p><\/blockquote>\n Digitizing the process could reduce time and costs by 75%, he estimated.\u00a0<\/p>\n What role, if any, does blockchain play in all this? \u201cI think if we are being honest, voluntary carbon markets \u2014 and regulated carbon markets \u2014 need blockchain for asset issuance and traceability,\u201d Michael Kelly, co-founder and chief product officer at Open Forest Protocol \u2014 an open platform for scaling nature-based solutions \u2014 told Cointelegraph.<\/p>\n The current MRV process is \u201cconvoluted,\u201d he said, with \u201cno visibility into issuance schedules, no traceability, quite frequent double-spending, etc.\u201d As a result, \u201cpeople are hesitant to touch carbon credits.\u201d <\/p>\n DMRV combined with blockchain could change things. \u201cOnce they can see everything about it [a project] \u2014 down to the upload of each tree in a sample plot for a 20-year time period \u2014 we will see new participants coming into the arena.\u201d<\/p>\n Some incremental improvements in MRV \u2014 like digitizing submission forms \u2014 don\u2019t really need blockchain tech, noted Nesbitt, but that might soon change with the addition of \u201cfeatures like smart contracts that allow for more inclusive or just asset pricing, baking in a reasonable compensation for local communities involved in carbon credit projects.\u201d <\/p>\n However, there may be limits on how much blockchain tech alone can fix things. Blockchains can enable \u201ctransparency, security, automation and immutable records of data flows in an auditable fashion,\u201d but that might not be enough, suggested Hyphen\u2019s Austin, adding:<\/p>\n \u201cDMRV can only be as good as the data and methodology used. If you take a flawed methodology and digitize it with blockchain, you now have an immutable and transparently flawed dMRV.\u201d\u00a0<\/p><\/blockquote>\n Improving methodologies is crucial in Austin\u2019s view. \u201cActivity-based approaches work well in the case of combustion engines or industrial processes, which you can accurately measure and multiply by a factor,\u201d he told Cointelegraph.\u00a0<\/p>\n But these don\u2019t really work on \u201cnature-based solutions.\u201d A forest in Brazil may sequester more carbon dioxide than an equally sized forest in Indonesia based on many variables, including drought, rainfall and humidity, for example.<\/p>\n \u201cNature is a breathing and living asset; therefore, methodologies need to measure the actual amount of CO2\/CO2e [carbon dioxide\/carbon dioxide equivalent] that is a sink or source instead of calculating a best guess,\u201d said Austin.<\/p>\n Work is being done in this area, especially in the wake of the Verra controversy. \u201cResearchers in this field are showing how the quality of \u2018avoided deforestation\u2019 carbon credits could be improved,\u201d Julia Jones, professor in conservation science at Bangor University, told Cointelegraph. \u201cHowever, there is, of course, some lag between new research and it getting into policy and practice.\u201d<\/p>\n The Cambridge Center for Carbon Credits actually built<\/a> a research prototype last year of what a carbon credits marketplace might look like on the Tezos blockchain. \u201cOur first observation was that the blockchain really wasn\u2019t the bottleneck here \u2014 all of that infrastructure works fine and has a solid technical roadmap for scaling,\u201d Madhavapeddy told Cointelegraph. The barrier lay elsewhere. <\/p>\n \u201cThe blocker to any meaningful deployment came from the lack of supply of credible projects, since the quantification mechanisms\u201d \u2014 i.e., additionality, permanence and leakage \u2014 \u201care only just maturing as satellite infrastructure and the associated algorithms are peer-reviewed and deployed.\u201d<\/p>\n Kelly also cited a shortage of \u201cquality carbon development projects and accessible credits,\u201d especially in the nature-based asset subsector, as a significant obstacle for VCMs.<\/p>\n Projects like reforestation, afforestation, mangrove restoration and biodiversity conservation are now short of funding. This project shortfall leads to a low supply of credits, which becomes a sort of chicken-and-egg problem.<\/p>\n \u201cThe result of this system is that carbon credits remain a relatively illiquid, convoluted and difficult-to-scale system that disincentivizes stakeholders from financing, purchasing and trading the assets to participate in the market,\u201d said Kelly.<\/p>\n \u201cThe biggest barrier right now is the collective credibility of the voluntary markets, and we hope that our work on the digitization and systematic design and publishing of analyses can help bridge that gap,\u201d said Madhavapeddy.<\/p>\n What about claims, like those cited above, that dMRV technology has the potential to revolutionize the way the voluntary carbon market operates? Is that going too far?<\/p>\n\u201cA huge difference\u201d<\/h2>\n
![](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-08\/25b73f83-8254-43f4-a4f5-e61d653d1531.jpg\")
<\/figure>\nCan blockchain help fix a \u201cconvoluted\u201d process?<\/h2>\n
![](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-08\/a84061df-efa2-4f61-88e5-c4bd993408ef.png\")
A \u201cperfect storm\u201d?<\/h2>\n