Our world is at a tipping point, and therefore new incentive mechanisms are needed to try and rebalance our economic activities to protect forests and reinforce behaviors that lead to the reduction of greenhouse gas emissions.
Some of the initiatives that can reduce greenhouse gases are carbon offsets and carbon insets. Carbon offsets are defined as activities to reduce or remove CO2 from the environment to compensate for CO2 made in industrial or human activities. While carbon insets on the other hand are activities that aim to reduce CO2 by taking action within an industrial activity. Both types of initiatives result in the creation of carbon credits that can be used to help us reach carbon neutrality.
In this article, we describe the difference between carbon offsets and carbon insets and will explain the role of Blockchain technology and how our NEXUS technology can be used to address this challenge of implementing such initiatives.
An example of voluntary CO2 balancing to offset industrial emissions is forest tokenization. By tokenizing the amount of CO2 that a plot of forest land can absorb, investors and corporations can purchase these tokens to support foresters. These CO2 tokens can be used to offset carbon emissions while making it financially attractive for individuals or organizations to manage the protection and development of these forest areas.
How NEXUS enables the monetization of tokenized forest
To tokenize the amount of CO2 a forest can absorb, a forester will have to measure and prove how much CO2 can be absorbed by the land he is preserving. Once these calculations are done, an independent auditor checks and approve them.
The forester then submits those calculations to the authority that has the sole right to issue the CO2 tokens. Using our NEXUS system, the tokens are minted on the Algorand blockchain and then returned to the entity in charge of the land preservation efforts for future trading.
An example of such an initiative is Dein Hektar.
Additionally, through our stable coin service, customers that wish to equalize their carbon footprint can purchase these CO2 tokens by digitizing their money through our NEXUS portal. This process guarantees that the customer’s money is safe and that the transaction is secure, cheap, and auditable.