Voluntary Emission Reduction by People
CDR Credit
The Tokenization of CDR assets formed by carbon removal projects results in high quality carbon credit. These carbon credit can be traded in the voluntary carbon reduction market. Institutions , companies and individual that have achieved net zero emissions can purchase these carbon credits for offsetting or retiring their carbon emission.
1
CDR Credit
A number of criteria and methodologies that can be used to register CDR carbon credit. However, these methodologies do not significantly distinguish CDR carbon credit from other methodologies. For example, it is clear that 1 ton CER, 1 ton VCS, and 1 ton CDR have different values. The current carbon credit system contributes to this valuation bias. In order to better reflect the uniqueness of CDR projects, some standards suggest a labeling format.
2
Tokenization of CDR Credit
Tokenization of CDR carbon credits means that the CDR carbon credits’ information and functionality are moved onto a blockchain, where the carbon credit is represented as a token. Or the carbon credit can be issued natively on-chain, with all attached attributes publicly visible. One CDR carbon credit equals one CDR carbon token.
3
VCM Maket
When credits are tokenized, they can be listed for sale and be bought and retired by anyone with a crypto wallet (at the moment, that’s roughly 1 billion people, but this number is rapidly increasing). This is in stark contrast to the traditional VCM set-up, where carbon credits are for the most part only accessibly to those with access to brokers or traders, and purchased by corporations. Tokenization also brings a level of efficiency and transparency to the VCM that previously didn’t exist.
4
Method
Carbon credit tokenization can be done in a variety of different ways. Two fundamentally different models are the “custodial” and “non-custodial” bridges, which can be implemented with various, more nuanced approaches, as well as “native issuance”.
