Blockchain Technology

Blockchain Technology

ClimateTrade use blockchain technology
Blockchain Technology

Why does ClimateTrade use blockchain technology?

Understand how this technology brings innovation and transparency to the carbon market. In the Kyoto protocol (1997) signing countries agreed to limit the emissions of six greenhouse gases, here is where carbon credits were born. This meant that polluting companies,  instead of paying taxes to the governments, could pay directly to the companies which generate those credits. Likewise any traditional market, brokers started to speculate and get most of the profit, preventing money from reaching the green projects and hence hindering their development. This not only left unprotected carbon credit sellers but also buyers who could be sold the same credit several times (due to the lack of transparency and traceability of the carbon credits cancellation mechanism). The problem as it usually happens was that the market was centralized in the hands of traditional brokers, who used to manage their own databases which can be manipulated at their own discretion, being able to write, change, delete and restrict access or other actions. The process also becomes more expensive, lengthy and tedious, discouraging many companies from buying / selling carbon credits. ClimateTrade brings this situation to an end, allowing companies and project developers to benefit from blockchain technology.  Blockchains are distributed ledgers which replicate the data across the different nodes involved in the network.That is, instead of being centralized on a single server, the information is decentralized on different computers, each saving its own copy. This prevents any record from being changed or deleted, since it only allows adding new data, thus preventing data from being altered or manipulated. The information on a public blockchain is accessible to everyone and visible on any block explorer, facilitating the traceability and transparency of canceled carbon credits. Neither ClimateTrade, nor the creators of the blockchain itself could alter the information since all nodes have replicas of the data and are required to follow the consensus algorithm, which ensures the immutability of the data stored in them. The consensus algorithm used in the blockchains we work with is Proof of Stake. The first blockchains are Proof of Work (Bitcoin and Ethereum 1.0) which involves spending huge amounts of energy to produce new blocks and concentrate the power in the hands of a few miner pools. On the contrary, the Proof of Stake allows to process a greater number of transactions per second, decentralizing the rewards per block to anyone who operates the blockchain token together with a laptop or mobile connected to validate the blocks, thus saving on fees and reducing the environmental impact in  more than 99%. To go further in the process of automation, ClimateTrade created a REST API available to company developers who wish to integrate this innovative system. This allows the incorporation of already existing projects called from this API into its code, thus offsetting the carbon footprint generated in their business processes.

algorand climatetrade
Blockchain Technology

The greenest blockchain technology: is it possible?

Algorand pledges to be the greenest blockchain and be carbon neutral thanks to the alliance with ClimateTrade. The Algorand network was designed from the ground up to minimally impact the environment. Because its consensus is not based on energy-intensive proof-of-work and requires minimal computational power or electricity, Algorand has been a leader in minimizing the environmental impact of blockchain technology. “We understand that the mechanics of measuring the environmental impact of a global, decentralized and widely used blockchain are nuanced and complex. That’s why we are teaming up with ClimateTrade to continue and double-down on our eco-conscious efforts.” said Silvio Micali, Founder of Algorand.  “Clean energy and addressing climate change are priorities for the United Nations, global organizations and governments alike. Algorand has a very low carbon footprint to begin with, and we are inspired by the leadership role the organization is taking to ensure the next generation of blockchain adoption is environmentally friendly,” said Francisco Benedito, CEO of ClimateTrade. How does Algorand offset its Carbon Footprint with Climatetrade? To achieve a carbon-negative network, Algorand and ClimateTrade will implement a sustainability oracle which will notarize Algorand’s carbon footprint on-chain for each epoch (a set amount of blocks). With its advanced smart contracts, Algorand will then lock the equivalent amount of carbon credit as an ASA (Algorand Standard Asset) into a green treasury so that its protocol keeps running as carbon-negative. Through this partnership, Algorand is able to leverage several projects of our marketplace that help to offset the low footprint of their network: The Southern Cardamom REDD+ project initiated by Wildlife Rescue and Wildlife Works, which protects the rainforest by avoiding more than 3 million tons of carbon emissions annually. The Vichada Gold Standard Climate Project which is aimed at reforestation in the Orinoco Department in Colombia. The Oaxaca Wind Project by Acciona which covers the electricity demand of 700,000 Mexican homes, avoiding the emission of 670,000 tons of CO2. The Sumatra Merang Peatland Project by ForestCO2 which aims to protect and restore the peatland ecosystem in Indonesia. With this alliance we not only work to achieve the carbon neutrality of Algorand but also to have a positive impact on the environment, which is how every innovative blockchain ecosystem should be in the future.

Other Categories

financiación climática género
Climate Impact

Gender-just climate finance

This year, the United Nations has chosen February as the month to focus on SDG 5, gender equality. In this article, we dive into a key concept connecting gender issues with climate action: gender-just climate finance.

mandatory carbon market
ClimateTrade News

ClimateTrade enters mandatory carbon market thanks to EEX admission

ClimateTrade is now operational in the EU’s mandatory carbon market (EU ETS) after completing its admission with EEX. Valencia, April 7, 2022 – ClimateTrade, the world’s first blockchain-based climate marketplace, is now operational in the European Union’s mandatory carbon market after completing its admission with the European Energy Exchange (EEX). From now on, buyers and sellers of EU allowances (EUAs), the carbon credits tradable under the EU Emissions Trading Scheme (EU ETS), can conduct transactions on the ClimateTrade marketplace, leveraging its agile digital platform for efficiency and transparency. ClimateTrade connects climate mitigation project developers directly with companies looking to offset their carbon footprint, and uses blockchain technology to ensure the end-to-end traceability of carbon credits. The company has facilitated the offset of more than 2 million tons of CO2 on the global voluntary carbon market since its inception in 2017. The EEX admission marks its first entry into mandatory carbon markets, making it the first and only company in Europe facilitating carbon offsetting in both the voluntary market and the EU ETS through blockchain. Francisco Benedito, ClimateTrade’s co-founder and CEO, comments: “Having the ability to operate in the EU’s mandatory carbon market is a crucial part of our strategy to power gigaton decarbonization, and we are very proud of this achievement. We chose EEX for being the leading energy exchange providing secure, successful and sustainable commodity markets worldwide.” “We’re delighted to welcome ClimateTrade based in Valencia as a new participant. We look forward to building markets together with them. A warm welcome from the whole EEX team,” says Carlos Miguel Urro, EEX Senior Sales Manager for Southern Europe. Driving impact and efficiency in the EU ETS The EU ETS is the world’s biggest mandatory carbon market, and plays a significant role in influencing the development of others around the world. But the urgency of the climate crisis, the growth of decarbonization ambitions and unexpected power market shocks are placing unprecedented pressure on this system.  In the white paper A 2030 outlook for Europe’s mandatory carbon market, launched today to commemorate its admission at the EEX, ClimateTrade analyzes established targets, recent policy adjustments and external drivers to predict the evolution of the EU ETS, and shares its vision for an efficient and impactful mandatory carbon market. The white paper is available to download for free here.

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Climate Impact

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