Page tree
Skip to end of metadata
Go to start of metadata

The net emissions tokens network represents the net emissions of an entity, which could be an organization, a building, or even a person.  It is the sum of all the emissions from different channels such as the utility emissions channel, plus offsetting Renewable Energy Certificates and carbon offsets.  Each token represents either an emissions debt, which you incur through activities that emit greenhouse gases, or an emissions credit, which offset the debt by removing emissions from the atmosphere.

The carbon emissions token is a fungible token, whereas data on the utility emissions channel are just immutable data (not tokens), as they represent the emissions from a particular meter tied to a particular utility during a particular period of time.  Following examples from capital markets, we can link this kind of data to the fungible tokens by:

  1. The underlying data, such as the utility emissions records, should be updated to link to the particular fungible token. 
  2. The fungible token should contain a manifest of all the underlying data which went into it. 

We propose to implement a carbon emissions token based on the eThaler project from the Capital Markets SIG.  eThaler is a Central Bank Digital Currency (CBDC) implemented on a private Ethereum network running Hyperledger Besu.  It supports a central bank which creates and mints tokens and transfers them to member banks, who would then distribute them to retail customers of the banks.  In the case of carbon emissions, it could support a registry authority, which could be a network operator or supranational/national/regional carbon authority (see below), which authorizes a number of issuers of tokens.  The issuers could be auditors of carbon emissions or project developers of renewable energy or carbon offsets, who issue tokens based on audits of companies' or projects' operations.  eThaler's features can be mapped to emissions tokens like this:

Token Types

  • Emissions audit - represents the actual emissions of an organization, as reported by an auditor.
  • Carbon offsets - represents reduction of emissions through projects such as forestry, sequestration, etc.
  • Renewable Energy Certificates (REC's) - represents energy generated from renewable sources such as wind and solar 

Token Operations

  • Add new token definition – Multiple types of emissions tokens can be supported on the network, such as emissions, Renewable Energy Certificates (REC's), and offsets.
  • Mint – Authorizes a supply of tokens to be issued in the future, based on results of operations from audited companies and renewable/offsets projects.
  • Register/Unregister dealer – In our case, it would be registering and unregistering auditors or project developers authorized to issue tokens.
  • Transfer – In eThaler, the central bank transfers tokens to dealer banks.  In our case, we would allow an auditor or project developer to create a token based on audited results and then transfer it to a party, which could be a business or individual.  Emissions audit tokens cannot be transferred: They stay with the organization that was audited as a record of their emissions.  Offsets and REC's can be transferred until they are retired.
  • Retire - this is not in eThaler but would need to be implemented.  When a token is marked as "retired," it is counted towards the emissions reduction of the retiring organization and cannot be transferred again. 
  • Burn – this would not be implemented.

The Carbon Emissions token taxonomy developed by the Interwork Alliance is similar to eThaler's token taxonomy.  The differences are:

  1. Currency could be repeatedly transferred between parties, where as emissions records, offsets, and REC's should not be.
  2. Currency could be removed from circulation or "burned", but emissions records could not be, because the physical greenhouse gases stay in the atmosphere (hundreds of years at least.)

The only operation for a net emissions token/asset is Issue with the following fields:

  • issuer identifier
  • recipient identifier
  • token type
  • quantity 
  • UOM
  • from date/time stamp
  • thru date/time stamp
  • metadata
  • manifest
  • date/time stamp of when the asset was created

Examples of these tokens/assets include:

  • Renewable Energy Certificate:
    • Issuer ID = Generator of REC
    • Recipient ID = Buyer of REC
    • Asset Type = REC
    • Quantity = 1
    • UOM = MWH
    • From/thru date time stamp = do we need this for REC's?
    • Metadata = Region and Time of energy enerated
    • Manifest = URL linking to the registration for the REC purchased
  • Carbon emissions offest:
    • Issuer ID = Certifier or Issuer
    • Recipient ID = Buyer
    • Asset Type = Emissions Offset
    • Quantity = amount
    • UOM = MtCO2e
    • From/thru date time stamp = do we need this for emissions offset?
    • Metadata = type of project, location, etc.
    • Manifest = URL linking to the registration of the emissions offset
  • Emissions Audit:
    • Issuer ID = auditor
    • Recipient ID = organization or entity
    • Asset Type = CO2 emissions
    • Quantity = amount of emissions
    • UOM = MtCO2e
    • Metadata =
    • From/thru date time stamp = time period of the net emissions
    • Manifest = links to access all the emissions tokens/assets used to prepare this net emissions

With these tokens, we can calculate the net emissions by first subtracting the effect of Renewable Energy Certificates (REC's.)  REC's offset the energy produced by non-renewable sources, so we'll need to get the non-renewable vs renewable energy mix in the original emissions tokens/assets from utility emissions data channel.  Then we subtract the offsets to get the net emissions.

Possible Use Cases

Cap and Trade:

  • The central bank could be the cap and trade authority.
  • Tokens for allowable emissions could be issued to all members of the cap and trade regime.
  • They can trade the tokens amongst themselves.
  • As emissions are counted, during an audit, cap and trade tokens should be retired.

Green Bank:

  • The central bank is a green bank, which raises funds for climate projects.
  • For approved projects, the bank would issue emissions tokens to project developers based on the projected emissions reductions of the projects.
  • When emissions reductions are verified, they are exchanged for tokens.
  • The tokens can then be redeemed for money.

Network Operator Model:

  • The network operator is a neutral, blockchain technology vendor who runs the network for a (very very very small) fee. 
  • It could mint and issue tokens in response to requests from network members, who pay a fee for the tokens to be issued.

Outstanding Issues

Transfer of emissions down the supply chain and avoiding double counting are major issues to be addressed in the future.  The problem is that emissions are counted in multiple ledgers, for example this document from Gold Standard describes how they could be counted in both offsets and national registries.  See also the Gold Standard double counting guidelines document.


  • No labels

4 Comments

  1. Hi Si Chen, thanks for sharing your idea of the Net Emissions Data Channel. I like the idea of having all net emissions accounted for each individual person/organization/company etc.
    In the following, I post some questions which came to my mind:

    1. net emission = total emission - offsets?
    2. how would you gather/transfer all the data for/to this channel?
    3. When I think of tokens, I think of something positive like owning 1 Bitcoin. Having many emission tokens would be something like a climate debt, right? 
    4. Who would issue the token in the first place?
    5. Will the token stay forever or will the be deleted, e.g., once a year?
    1. Thanks for your comments:

      1. Net emissions = total emissions - renewable energy certificates - offsets.  The renewable energy certificates would offset the amount of non-renewable energy used, so we'd go back to the utility data and get the renewable vs non-renewable portions.  Other than that it is just straightforward subtracting offsets from total emissions.
      2. Moving data to/from this channel would require an Issue function.  Data is placed on the channel when you Issue a token/asset.  It is then moved off the channel by Issuing another token/asset.
      3. Yes, the token/asset is like owning something, except you don't buy it like bitcoin.  You get it issued to you based on your activity.  Emissions tokens would be a climate debt (I like that term!)  Emissions offset would be a negative to the debt.
      4. The tokens/assets would be issued by auditors, ie recognized members of the network.  So in that way it may be better to have a permissioned network?
      5. They stay for as long as the emissions stay in the atmosphere (300 to 1000 years according to NASA), so I think for our purposes "forever".  Some companies, such as Microsoft, have pledged to offset their emissions during their entire history, so they would need it going back in time.

      I'll put these answers in the main wiki page as well.

  2. Great concept Si Chen,
    I like the idea of preventing emissions tokens from being transferred once issued to the emitter,
    and issuing another token to represent the “footprint” which can be passed down supply chains.
    You mention an auditor issuing these “footprint” tokens to customers of emission token recipients. 
    It seems this would be easy upstream where transactions are high value and easily human audit-able,
    but it would be challenging downstream, say in a B2C or C2C markets.
    Why not allow these “footprint” tokens to be transferred freely without an auditor, to allow them to be passed down supply chains together with the goods and services they are linked to? Although this movement could allow them to be hidden, they remain linked to the emissions tokens from which they came, which cannot be moved.
    And if the goods and services are tokenized then the offset tokens can be packaged with those, making them hard to hide and allowing them to automatically travel around with transfer of goods and services.

    Considering carbon markets are useful for offsetting, and allowed for in the Paris agreement, why not allow issued offset tokens to be traded freely before being “retired”?
    Or could the minted tokens be traded before they are issued?

    Here is a sample scenario:
    Offset token O is minted and tradable in offset markets, it is “active”.

    Emission token E is minted and issued to recipient / emitter, it cannot be moved, it is “retired”.
    However, another “footprint” token F is issued to recipient along with E, this one is “active” indicating it has not been offset.
    F travels down supply chain together with the goods and services which the emissions are attributed to.

    Emission footprint is eventually offset by retiring F tokens with a proportional amount of offsets O tokens, which “retires” both F and O

    “offsetting” F with O issues a new token FO which represents offset emissions.
    FO is further passed down supply chain to prove carbon neutrality.

    1. Thanks for your feedback Darren Zal.  You make some good points here.  The emissions offsets and REC's could be available for trading until they are "retired," in which case they're owned by a particular party.  I'll change the page for that.

      As for the footprint token, I did some research on double counting.  It's actually a very big problem which results from all these siloed ledgers of emissions offsets.  For example,  this document from the Gold Standard talks about the problem when offsets could also be counted in a national registry of emissions reduction.  They've even published a Double Counting guideline document.  Suffice it to say, this is a bigger problem which needs to be addressed by coordinating across multiple ledgers.  I think it's better if we remove this feature for now.