Before I start discussing the details of the recent handshake between IBM and environmental Fintech startup Veridium, done to transform the current scenario of carbon credit, it is necessary to answer an essential question: What are carbon credits?
A carbon credit is a legal permit which, once acquired by the holder, allows the entitled (government or organizations) to release a certain amount of greenhouse gases like carbon dioxide. The credit limit is usually close to a ton of carbon dioxide. The whole idea of creating a rule of carbon credit is to lower the ongoing emission of the poisonous carbon dioxide and other greenhouse gases which directly affect the quality of the atmosphere.
About the handshake of Verdium Labs and IBM:
IBM has been betting on blockchain for a while now; In 2017, IBM collaborated with Stellar, a blockchain-based startup, for releasing a payments platform aimed at speeding up transnational payments. Since then, IBM has been continuously looking at valid and profitable partnerships in order to explore the benefits of blockchain technology.
This time, in collaboration with Veridium and continued partnership with Stellar, IBM aims to sell carbon offset tokens through Stellar blockchain.
How? Hong-Kong based Veridium Labs, will be working on making carbon credit more efficient by simplifying the whole offsetting process, thus also reducing a significant cost. The tokens will then be issued and managed on IBM-Stellar based blockchain system.
In a joint press release statement, both the companies declared the partnership to “transform the carbon credit market using IBM blockchain technology with the goal of making it easier for companies to offset their environmental footprints.”
Senior VP of IBM (Blockchain and Industry Partnerships), Bridget van Kralingen, stated:
“By using a public, permissioned blockchain network, we can help Veridium create a new sustainable marketplace that is good for business and good for the world.”
“This is a great example of how industries are being reinvented by blockchain [technology], in this case establishing a far more efficient and transparent approach to carbon accounting and offsetting that will empower individuals and companies to play a role in improving our environment.”
This Alliance: The three companies, Stellar, IBM, and Veridium Labs, have come up together to create a digital token which will be acting as a facilitator of carbon credit. This digital token will give an easier value to the now-difficult-to-account-for carbon credit. These tokens can be then purchased and sold through the Stellar laid blockchain network. Verdium will be working on creating a formula that will validate the token accuracy which is a rule of blockchain network.
I feel this alliance can surely create a small dent in the existing carbon credit rules, and there is no doubt that the atmospheric health should be taken seriously. How this collaboration will turn out, only time will tell.
Opinions expressed here by Contributors are their own.