nChain announces today the signing of an agreement with NAGEX to assess the viability of a global CO2 index based in North America that incorporates physical storage of CO2 and digital blockchain ledger technology.
Finding a global carbon price
Despite being one of the largest commodities in the world, carbon dioxide is rarely included in the primary indices designed to represent global production, consumption, and trading. Governments are imposing more taxes and fees on carbon emissions, but these are not based on a realistic, global free market price—and without that, financial markets struggle to allocate funding to sustainability projects. NAGEX hopes to accelerate CO2 trading volumes and encourage CleanTech investment with a revolutionary platform to first capture the provenance data of CO2 before digitizing the carbon market and developing a CO2 pricing mechanism and trading platform.
“nChain is excited to be working with NAGEX on this ground-breaking project that aligns well with our ESG strategy. Over The Counter CO2 commodity trading needs reform, especially when it comes to liquidity, transparency and pricing. Blockchain technology can help secure that, and we’re proud to have built one of the most scalable and energy-efficient ledger designs globally,” nChain’s Chief Commercial Officer Leandro Nunes commented.
Tokenising data with blockchain
Blockchain technology ensures data is securely stored in a public and immutable way, and the NAGEX platform uses this to create digital Carbon Warrants Passports (CWPs) by issuing a unique ‘token’ for each carbon credit, permit and offset that cannot be altered or replicated and, whilst they can be traded an endless number of times, are “spent” only once. The unique benefit of NAGEX’s platform is scalability: where competitors bundle thousands of permits into lots, nChain’s technology allows the trading of individual permits—microtransactions—for low fees. The exchange is also transparent by design and more easily regulated.
NAGEX’s CEO Brian de Clare stated, “To enable the CO2 carbon credit market to function in a manner that attracts significant capital to the CleanTech sector globally, the industry, governments, financiers, regulators and other participants need a global standardized and verifiably trustworthy price for CO2 that has been neutralized from its harmful effect on the environment. NAGEX is excited to leverage nChain’s blockchain expertise to assist us in creating the CWPs that will serve as the backbone of NAGEX’s value proposition. With the immutable nature of the blockchain along with a network of storage locations in North America, NAGEX will be able to offer clients certified carbon credits that capture data from the first emission, through every trade, regardless of size, down to the very end of the supply chain, where the price discovery can rely less on governmental influence and more on the supply and demand for those credits, permits and offsets.”
Engaging relevant experts
NAGEX has engaged the services and expertise of nChain and is in the process of engaging one of the leading consulting firms globally for a consultancy phase before moving to develop the blockchain-based platform. NAGEX is in the process of building and securing rights to a series of storage facilities in North America where CO2 can be permanently sequestered. The objective is to begin the process of moving CO2 emissions pricing away from governments to a more free market model influenced by supply and demand. Once it has been successfully rolled out to the North American market, the plan is to expand the model globally.
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