Regenerative Economics in Web3
By John Ellison
Regenerative Economics in Web3
By John Ellison
Time is running out...
We have just under 8 years left to reduce global emissions by 50% and close the emissions gap to prevent the most catastrophic impacts of climate change. We’re talking about reducing global emissions by over 30 gigatonnes per year—that’s 30 billion tons of greenhouse gases removed from the global economy.
Solutions are already here
We already have the technological solutions in place to decarbonize the global economy and remove gigatons of carbon from the earth’s atmosphere.
Unfortunately, human organizational systems have failed to coordinate the commitments and capital necessary to fund these solutions and address the most existential threat of our time.
Coordination tools
In order to solve this coordination failure, we need coordination tools—of which blockchain, the core technology in the latest evolution of the internet, is key.
Look at the bigger picture
Unfortunately, most people get hung up on the idea that “crypto is bad for the planet” simply because Bitcoin’s Proof of Work consensus mechanism is energy-intensive.
Please don’t make the same mistake!
Climate-positive crypto is here
There is a second and third generation of public blockchain networks that are built on very energy-efficient mechanisms, the most common being ‘Proof of Stake’. Proof of Stake is proven to be 99.95% more energy-efficient than Proof of Work and is being battle-tested to get ready for scale.
Blockchains are human coordination tools
In the same way that the advent of the internet allowed for global communication of information, the evolution of digital currencies on public blockchains is enabling global coordination of capital flows that enables a myriad of actors to trust each other without intermediaries or permission from authorities.
There are a few core features of blockchain technology that address critical challenges in scaling carbon markets to date, with carbon markets being one of the core economic systems to accelerate decarbonization and sequestration of greenhouse gases.
Unlocking a regenerative economy
Public blockchain ledgers allow for a level of transparency and accountability that enables a myriad of actors to trust each other and facilitate a unified global carbon marketplace. This is one of the first glimpses of a regenerative economy—with carbon being an intermediary commodity that acts as a proxy for overall planetary health.
Many actors are already looking at other measures of planetary health, including cultivating biodiversity, removing plastic from the ocean, and purifying water. This is a powerful demand signal that the global economy is ready to fulfill two missing functions:
Internalize negative externalities
Manage common resources
In the same way that web3 is signaling that the internet has evolved to include blockchain as one of its core technologies, we believe that the explosion of carbon markets is a signal that economic systems are maturing out of their extractive, fossil fuel-powered roots.
We believe that 2022 will be a core milestone in the transition into a regenerative global economy with carbon markets playing a major driving force.
ReFi emerging in web3
While regenerative economics has been a topic of many papers and discussion for years, this regenerative finance movement emerging in web3 has given many glimmers of hope.
But the unfortunate reality is that the current system of measuring, reporting, and verifying carbon credits has many issues that need to be addressed in order to justify the injection of trillions of dollars of capital to scale double-digit gigaton reductions in emissions.
Our role at Toucan in creating trustworthy and credible infrastructure for carbon markets will only succeed at scale if a whole ecosystem of actors solves the other pieces of this puzzle. There’s a symphony underway and we are one of many striving to play in time...
Carbon markets, MRV, and beyond
The emergence of decentralized, digital MRV (measurement, reporting, and verification) is an important trend to enable a more robust and efficient carbon market at scale. A handful of actors are trying to address this problem including Open Forest Protocol and Regen Network, but there are many others...
In fact, there are over 115 different web3 experiments whose purpose is to scale meaningful climate action. You can see them all here.
A call to action
At Toucan we are fiercely devoted to building infrastructure and enabling markets that will finance the world’s best climate crisis solutions at scale. We are committed to working with industry bodies, academics, and market experts to ensure that the carbon markets of tomorrow help humanity reach net zero by 2050.
If you or anyone you know have deep carbon market expertise and want to get involved, we’d love to hear from you.
Get in touch
I always enjoy meeting new people and making new friends, so if you want to get in touch—please do! You can find me on Twitter at @climateXcrypto and on Linkedin.
Check out the work we’re doing at Toucan.earth and follow us on Twitter
We also have just published the first edition of our weekly newsletter: deCarbonized — Demystifying the world of carbon markets in web3 and beyond...
To view an extended version of this post, check out Toucan’s blog.
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