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We propose to implement a carbon emissions token based on the eThaler project from the CMSIG. 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:
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- 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.
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