Blockchain Technology

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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.

June 15, 2021

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.

June 4, 2021

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Climate Change News

COP26: Why is it so important?

Under the title “Uniting the world to tackle climate change”, the next United Nations Climate Change Conference (COP26) will bring together representatives of 200 governments to accelerate climate action to deliver on the Paris Agreement. On 12 December 2015, at COP21 held in Paris, world leaders adopted a historic agreement with the firm purpose of curbing climate change. They pledged to keep the average global temperature increase below 2°C – compared to pre-industrial levels – and to work towards limiting this increase to 1.5°C. They also agreed to intensify efforts to adapt to the impacts of climate change and to build financing flows consistent with the transition to a low-carbon economy and climate-resilient development. The upcoming edition to be held in Glasgow (UK) from 1-12 November 2021, is key to review these previous commitments and shape the new responsibilities in the fight against global warming. What to expect from COP26? COP26 aims to demonstrate the urgency and opportunities of moving towards a carbon-neutral economy, as well as the power of international cooperation to address the most serious challenges the world is facing. One of the most anticipated developments concerning the Glasgow meeting is to create a better definition of emission reduction calibration methodologies. The details of accounting and transparency constitute the essential nuts and bolts of the Paris Agreement, and are critical to avoiding real risks of “double counting” of emissions reductions. Another important point expected is the regularisation of the so-called Article 6 of the Paris Agreement, which addresses two of the main market mechanisms. In Article 6.2, trading between countries of credits generated by emission reduction/removal projects is proposed. In Article 6.4, a decentralised trading mechanism between public and private entities is proposed, based on projects certified and validated by a supervisory body. Nature-based solutions A third objective of COP26 is to focus on “nature-based solutions” and analyse the potential of forestry, ecosystems and agriculture to combat global warming. These opportunities are crucial to absorb emissions and help countries reach net-zero carbon targets. (WWF: Nature-based solutions for climate harness the power of nature to reduce greenhouse gas emissions and also help us adapt to the impacts of climate change). In the short term, voluntary carbon credits from projects focused on emissions avoidance/reduction can help accelerate the transition to a decarbonized global economy, for example by driving investment into renewable energy, energy efficiency, and natural capital. They enable companies to support decarbonization beyond their own carbon footprint, thus accelerating the broader transition to a lower-carbon future. In the medium to long term, voluntary carbon credits could play an important role in scaling up carbon dioxide removals needed to neutralize residual emissions. Investing in carbon offsetting projects helps countries meet these goals by providing solutions to reduce the amount of carbon in the atmosphere. This mission helps achieve the goals of the Paris Agreement and enables everyone to get involved in climate action. ClimateTrade at the COP26 ClimateTrade will be the only carbon offsetting start-up from Spain to be physically presented at the Sustainable Innovation Forum that takes place alongside COP26. With an exclusive booth and the participation of the CEO Francisco Benedito in the panel “How to make nature bankable”, the company is eager to lead and engage in carbon discussions and actions, reinforcing its mission of stopping climate change and generating a direct impact on society and on the environment.

October 29, 2021

Carbon Markets

U.S. vs UK bank decarbonization

The UK and the U.S. are both major global financial hubs, with a lot at stake when it comes to achieving Net Zero. In this article, we dive into the differences between U.S. and UK bank decarbonization strategies. Climate disclosures UK banks are widely considered to be ahead of others when it comes to climate-related disclosures, most likely because of the proactivity of their regulators. The UK Prudential Regulation Authority (PRA) was the first financial regulator to publish supervisory expectations on the management of climate-related financial risk in 2019. The Authority regularly remings banks that they are expected to assess their exposure to climate-related financial risks in the way they assess other drivers of financial risks. In the U.S., the Securities and Exchange Commission published a proposal for climate risk disclosures in March 2022, and is expected to finalize it by the end of the year. These and the PRA’s disclosure expectations are aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), which were published in 2017 to help the financial sector adapt to climate change. These have been widely supported across the industry, but according to the 2021 TCFD Status Report, adoption is much broader in Europe, with 50% of listed companies having published TCFD-aligned financial reports in 2020, compared to 20% in North America. Operational decarbonization In the banking sector, scope 1 and 2 emissions represent only a small fraction of total carbon footprint, with much more coming from lending (scope 3). As such, carbon neutrality in banks’ own emissions from operations and energy is generally the first milestone to be achieved. In the UK, NatWest and Barclays have been carbon-neutral in scope 1 and 2 emissions since 2020. Lloyd’s Bank already uses 100% renewable energy and plans to reach Net Zero operational emissions by 2030. HSBC is also working towards a Net Zero by 2030 target for its own operations, while Standard Chartered plans to reach this goal by 2025. Meanwhile in the U.S, Wells Fargo and Bank of America achieved carbon neutrality for their own operations in 2019, while JP Morgan reached this goal in 2020 and Morgan Stanley plans to be carbon neutral in 2022. Here it’s interesting to look at the wording used by banks: in the UK, Net Zero tends to be the preferred target, which involves a drastic reduction in emissions before carbon offsets can be used to “neutralize” remaining emissions. This target is more difficult to achieve, but much more effective to combat climate change. In the U.S, banks seem to prefer reaching the words “carbon neutrality”, which can be achieved mostly through carbon offsetting, with no minimum reduction. They reached their carbon neutrality goal earlier than UK banks, and are now focusing on reducing their operational emissions. Citi is the only large U.S. bank with a Net Zero target for its own operations (by 2030). Funding for fossil fuels U.S. banks are among the biggest financiers of fossil fuels worldwide. The Banking on Climate Chaos report exposes the ‘Dirty Dozen’, the 12 banks that have financed the most fossil fuels since the signing of the Paris Agreement. Five of those are American, including four at the top of the list: JP Morgan (US$382B), Citi (US$285B), Wells Fargo (US$272B) and Bank of America (US$232B). Morgan Stanley is the last of the 12, with US$137B. In April 2022, Wells Fargo, Bank of America and Citigroup all proposed changes to their fossil fuel funding policies, but were only backed by around 11-13% of shareholders. Meanwhile, only one UK bank (Barclays) made the Dirty Dozen list, with US$167B of funding to fossil fuels since 2016. But even though the amount of financing to polluting industries is lower than in the U.S, banks in the UK did not fare much better than their American counterparts when it comes to their strategy to decarbonize lending. Only Lloyd’s Banking Group has made some exclusions from its portfolio: new oil field developments and companies involved in the exploration or development of oil sands can no longer receive funding from the bank. On the other hand, all large banks in the UK and in the U.S. have exclusion policies in place for coal financing, with UK institutions tending to be stricter than in the U.S. Customer carbon offsetting In addition to the above efforts, several banks have launched carbon tracking tools for their private customers, promoting individual climate action. This is particularly common in Australia, with Commonwealth Bank and Westpac both offering this feature. But none of the large U.S. banks analyzed in this article appear to offer this option. In the UK, NatWest has partnered with CoGo to offer customers a summary of their carbon footprint, as well as tips to reduce it, through its banking app. However, few banks also give their clients the option to offset their carbon footprint. In Spain, Santander Bank has launched a new feature that allows customers not only to track and reduce their carbon emissions, but to offset them via the ClimateTrade platform. The bank has plans to roll out the service for its UK customers in the coming months. ClimateTrade’s API can be integrated into any banking application or website to present users with a summary of their emissions, calculated according to their card and direct debit transactions. It then gives customers the option to offset this footprint directly from their account by contributing to sustainable projects worldwide. All projects offered by ClimateTrade are certified by internationally recognized standards like Verra, Gold Standard of the CDM, and aligned with the UN Sustainable Development Goals. Additionally, all transactions are fully traceable thanks to blockchain technology. If you would like to know more about ClimateTrade’s solutions for the banking sector, get in touch with our experts.

August 25, 2022

Climate Impact

Gender equality for climate action

When it comes to combating climate change, women are a key part of the solution. In this article, we explore the importance of gender equality for climate action. March 8th is International Women’s Day, and throughout the month, many organizations increase their focus on supporting women in various ways. For the UN, this is also the month of Sustainable Development Goal 5 (SDG 5) relating to gender equality. While some progress has been achieved in recent years, we are still very far from gender equality: worldwide, women still earn 24% less than men, and no country has managed to close this pay gap. Around the world, 750 million women and girls were married before the age of 18, and in 18 countries, husbands can legally prevent their wives from working. Women’s vulnerability to climate change Covid-19 has worsened gender inequality: new projections of global poverty by UN Women, UNDP and the Pardee Center for International Futures estimate that globally, 388 million women and girls will be living in extreme poverty in 2022 (compared to 372 million men and boys). According to these new forecasts, 83.7% of the world’s extremely poor women and girls would live in just two regions: Sub-Saharan Africa (62.8%) and Central and Southern Asia (20.9%). More women than men live in extreme poverty today, and as such, they are disproportionately affected by the impacts of climate change. But they are also a key part of the solution, which is why any efforts to mitigate climate change must also tackle gender equality challenges. Women and agriculture Agriculture is at the center of the climate crisis both because the effects of global warming are threatening global food security, and because more sustainable agricultural practices could provide climate solutions. For instance, the latest IPCC report on climate change adaptation and mitigation highlighted agroforestry as a climate-resilient way of growing food while also creating wildlife habitat. Globally, women are just 13 per cent of agricultural land holders, yet they represent around 43% of the agricultural workforce. In the least developed countries, 64.3% of women were employed in agriculture in 2015. According to the UN Food and Agriculture Organization, if women had the same access to productive resources as men, they could increase yields on their farms by 20-30%, which would raise total agricultural output in developing countries by up to 4%, providing solutions to food security challenges. Gender-responsive climate finance There is increasing evidence that shows that gender equality and women’s empowerment would yield greater returns to economic growth and, more broadly, to sustainable development. It is therefore clear that incorporating gender awareness and gender criteria into climate financing mechanisms and strategies would make climate finance more efficient. But women still don’t have adequate access to funds and other resources to adapt to the consequences of climate change: 9 in 10 countries in the world currently have at least one law impeding women’s economic opportunities, including access to credit. Gender considerations were only recently included in climate collaboration: there was no mention of gender in UN climate change negotiations until 2008. Today, climate finance mechanisms are beginning to include gender-related criteria in their assessment of projects. For instance, the Green Climate Fund, a financing body focused on mitigation and adaptation to climate change, adopted a gender policy in 2015, which says that a gender and social assessment must be included with every funding proposal, and that a gender and social inclusion action plan must be developed for every project. Watch the UNFCCC’s video below to understand what gender-responsive climate finance is and what benefits it can bring to women and men. ClimateTrade projects focused on gender equality On the ClimateTrade marketplace, climate mitigation projects are organized by SDG, so you can offset your carbon emissions while supporting the causes most important to you. We currently have 14 projects with a particular focus on gender equality (SDG 5): browse them here.

March 8, 2022