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- Token authority – a network operator or a supranational/national/regional carbon authority (see below) which authorizes a number of issuers of tokens.
- Token issuers – auditors of carbon emissions or certifiers of renewable energy or carbon offsets. Auditors would issue tokens based on audits of companies' operations. Certifiers would issue tokens based on projects they've certified.
- Token consumers – businesses and individuals who buy REC's or offsets to offset their own emissions.
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 and solar
All 3 types of tokens are fungible. The emissions audit tokens are "retired" (see below) as soon as they're issued from an auditor to a company or consumer. The offsets and REC's could be traded
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 certifiers authorized to issue tokens.
- Register/Unregister consumer – Auditors and project certifiers would register their customers on the network.
- 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.
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- Currency could be repeatedly transferred between parties, where as emissions records, offsets, and REC's should not be.
- 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 fieldsemissions tokens would have 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
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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.
Integration with Hyperledger Fabric
This network would be connected with Fabric channels such as the utility emissions channel through the auditors. The utility emissions channel is operated by an auditor on behalf of its customers. The auditor would also be on this network and would issue emissions audit tokens to its customers' wallets. The customers would then transact in emissions and offsets on this network using their wallets.
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.
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- 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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