Decarbonization, the removal of carbon, has become a critical tool in the fight against climate change, but it also seems promising as a means of global economic acceleration.
If that doesn't sound like a phrase I smoothly roll out of my keyboard, that's right: it's a quote from McKinsey's excellent report, "Carbon removals: how to scale a new gigaton industry. I had missed this report from last December, until I listened to this fascinating podcast by McKinsey people last week and searched for more information.
McKinsey focuses on CO2 removal
The ever-critical McKinseyians must think I am selling their research short in my summary, but a few conclusions can be drawn from their report and the podcast:
- Carbon credits play a crucial role in achieving the goals of the Paris Climate Agreement (COP21). Carbon credits allow companies to offset their emissions and achieve climate neutrality. For every ton of CO2 a company reduces or prevents, a credit can be issued and traded on the carbon market. This encourages innovation and green technologies.
- There is considerable doubt about the quality of many of the current carbon credits, especially the old-growth forest type where credits are issued for not cutting down trees that have been there for years.
- Technology-based removal methods are becoming more important, and even cheaper, than natural solutions such as reforestation.
- The capacity for CO2 removal (called CDR, for carbon dioxide removal) is still far from the gigaton scale needed to achieve a CO2 neutral world by 2050.
- There is a need for greater transparency in verifying the authenticity and duration of carbon removal, increasing liquidity for more efficient trading, and standardizing quality and validation processes across markets. Addressing these issues will increase the integrity of carbon credits, reduce skepticism and expand the market.
- McKinsey wouldn't be McKinsey, if the report they produce didn't involve a gigantic market: and yes, according to critical McKinsey minds, this CDR market of technology that removes CO2 is going to be a whopping $1.2 trillion: twelve thousand billion. By 2050, admittedly, but I hold them to it.
Enthusiastic about Tracer
In all honesty, I am so elated by McKinsey's report and podcast because I support a project that addresses exactly the problems identified and helps develop a market that McKinsey says will thus grow into a new gigaton industry: Tracer.
Tracer is the answer to the question: how do you scale the carbon credit market from small, opaque and without liquidity, to huge, transparent and liquid? This is extraordinary, because so far the solutions have been either liquid or transparent. Either efficient or reliable.
Tracer solves that with the elegance of a single smart contract, within which - it must be said - it does make the most of what is currently possible in terms of smart contracts. For enthusiasts, the "secret sauce" is the combination of a fungible and a non-fungible token in the same smart contract making it possible to offer buyers a single portfolio with multiple projects as the source of the carbon credits.
Compare it to a "basket" of stocks among fund investors. Buying carbon credits this way from different sources was not possible until now, making this market hell for companies buying large amounts of credits.
Persistence is the key
For example, last week at the GenZero Summit in Singapore, Salesforce's Chief Impact Officer Suzanne DiBianca sighed that when she buys carbon credits for millions of dollars, she receives as documentation "a few PDFs and, with any luck, another Excel spreadsheet. Like it's 1998, but in a billion-dollar market!
What I find special about Tracer is that it offers large buyers such as Salesforce a solution that does provide precisely the full transparency required, through a rating model based on "persistence"; by this is meant the length of time the carbon is removed. Choosing that persistence as the key factor - because some projects provide 100-year removals and others 10,000 years - also ensures right away that large amounts of carbon removal credits are easily comparable and thus tradable.
Combine that with an easy-to-understand business model to build out the ecosystem (a percentage of the number of carbon removal credits created when using the smart contract) and reward holders of the TRCR governance token for their contributions, and you have a proposition that I do appreciate.
Call me
I share this not only because it is rare that I agree so wholeheartedly with the McKinsey people, who often excel enormously at predicting the future well in retrospect. I mean: just look up a McKinsey report from say 1994 predicting the breakthrough of the Internet ... exactly. But I digress.
Because I am sharing this information today because Tracer is offering the opportunity to join before May 31 at an early movers fee, which is apparently blockchain speak for "soft-price-as-you-quickly-bent-friend," before the public sale starts this summer.
The first information on how to join Tracer is here in Dutch and here in English. I know the international team, which is led by Chief Business Officer Gert-Jan Lasterie (Flabber, Coolblue, Mediahuis and author of this standard work on crypto currencies) and further includes specialists from the US, France, Singapore and Taiwan.
Don't hesitate to contact me, because although I am not an expert on the matter, I am happy to explain why I support Tracer so fanatically and invite people to do the same.