Welcome back to the second instalment of our journey towards piloting our dRMV solution with Nyalore Impact! In today’s instalment, we invite you to explore the technological heart of our collaboration—the development of a state-of-the-art digital Monitoring, Reporting, and Verification (dMRV) platform. This innovative solution lies at the core of our efforts to enhance the integrity, efficiency, and transparency of clean cooking initiatives, empowering us to drive measurable impact and foster trust among stakeholders.

The Catalyst for Innovation

Our partnership with Nyalore Impact was founded on a shared vision of leveraging technology to accelerate the adoption of clean cooking solutions and create lasting, positive change in communities. From the outset, we recognized the critical role that accurate, reliable, and transparent data would play in supporting our environmental claims, demonstrating our impact, and building confidence among our stakeholders.

Driven by this conviction, our team at Verst Carbon embarked on a journey of innovation shortly after the formalization of our collaboration with Nyalore Impact. Our goal was clear: to develop a cutting-edge digital platform that would revolutionize the way we monitor, report, and verify the impact of our clean cooking initiatives.

Designing a Comprehensive dMRV Solution

The development of our dMRV platform was a meticulous process, guided by a deep understanding of the unique challenges and opportunities presented by the clean cooking sector. We knew that to truly make a difference, our solution had to be robust, scalable, and adaptable to the diverse contexts in which Nyalore Impact operates.

Our team of experts, consisting of hardware engineers, software developers, and carbon market experts, worked tirelessly to design and build a comprehensive dMRV system that would meet the highest standards of accuracy, security, and usability. The key components of our platform include:

1. Custom IoT Devices: We developed specialized hardware designed to seamlessly integrate with Nyalore Impact’s Electric Pressure Cookers (EPCs). These custom IoT devices are equipped with advanced sensors and communication modules, enabling them to capture real-time data on cookstove usage, energy consumption, and performance metrics.

2. Secure Data Transmission: To ensure the integrity and confidentiality of the data collected, we implemented robust security protocols for data transmission. The IoT devices securely transmit the captured data to our cloud-based dMRV platform, where it is stored and processed in compliance with the highest industry standards.
3. Cloud-Based Data Management: Our dMRV platform is built on a scalable and highly secure cloud infrastructure. This allows us to efficiently manage and analyze vast amounts of data, ensuring that the insights we derive are reliable, actionable, and easily accessible to authorized stakeholders.

4. Automated Reporting and Verification: To streamline the monitoring and reporting process, our platform automates the generation of comprehensive reports and verification documentation. This not only reduces the administrative burden but also enhances the transparency and credibility of our impact claims, as all data is thoroughly audited and verified.

Aligning with Global Standards

To ensure the highest level of integrity and credibility, our dMRV platform is designed to align with globally recognized methodologies and standards. We have adopted the Metered Energy Cooking Devices (MECD) methodology, which is specifically tailored for Gold Standard projects in the clean cooking sector.

By adhering to the MECD methodology, we can accurately quantify the energy savings and emission reductions achieved by Nyalore Impact’s EPC distribution project. This rigorous approach guarantees that every unit of energy saved, and every ton of carbon dioxide mitigated is meticulously recorded, reported, and verified, providing an unassailable foundation for our environmental claims.

Transforming Community Engagement

The impact of our dMRV platform extends far beyond the realm of data and technology. By embedding cutting-edge IoT devices into Nyalore Impact’s EPCs, we are fundamentally transforming the way communities interact with clean cooking solutions. The real-time monitoring and reporting capabilities of our platform not only enable us to optimize the performance of the cookstoves but also empower users with valuable insights into their energy consumption patterns.

Through our user-friendly mobile application, EPC users can access personalized recommendations, track their energy savings, and even earn rewards for sustainable cooking practices. This gamified approach to community engagement fosters a sense of ownership and motivation, driving the long-term adoption of clean cooking technologies.

Moreover, the transparency and accountability provided by our dMRV platform serve as a catalyst for building trust between Nyalore Impact and the communities they serve. By demonstrating the tangible benefits of clean cooking through verifiable data, we strengthen the bonds of partnership and create a shared sense of purpose in the fight against climate change and energy poverty.

The Foundation for Sustainable Impact

The development of our dMRV platform marks a significant milestone in our collaboration with Nyalore Impact. By harnessing the power of digital technology, we have created a robust foundation for monitoring, reporting, and verifying the impact of clean cooking initiatives. This not only strengthens the credibility of our environmental claims but also unlocks new opportunities for scaling our impact and attracting sustainable funding.

With our dMRV platform in place, we are now equipped to provide unparalleled transparency to our stakeholders, including investors, policymakers, and the communities we serve. The insights generated by our platform will inform data-driven decision-making, enabling us to continuously improve our strategies, optimize our resources, and maximize our impact on the ground.

Looking Ahead

As we reflect on the development of our dMRV platform, we are filled with excitement for the future. This technological breakthrough represents a significant step forward in our mission to accelerate the adoption of clean cooking solutions through carbon finance and create lasting, positive change in the lives of countless individuals and communities.

In the next instalment of our blog series, we will delve deeper into the real-world impact of our dMRV platform, exploring how we are empowering communities with Nyalore Impact, driving sustainable development, and contributing to the achievement of the Sustainable Development Goals.

The post Verst Carbon pilots dMRV platform for Transparent Impact : Part 2 first appeared on Verst Carbon.

As we start off this week, we are thrilled to share with you the inspiring story of our partnership with Nyalore Impact, a trailblazing social enterprise that is transforming the landscape of clean cooking solutions in Kenya and beyond. This collaboration marks a significant milestone in our mission to drive sustainable development and combat climate change through innovative technology and community-centric initiatives.

Nyalore Impact was founded in 2016 by the visionary entrepreneur, Awuor Dorothy Otieno, who recognized the urgent need to address the global climate crisis through practical and impactful solutions. Driven by a deep commitment to environmental sustainability and social empowerment, Dorothy set out to tackle one of the most pressing challenges faced by marginalized communities in Kenya: access to clean and efficient cooking methods.

In many rural households, traditional cooking practices rely heavily on biomass fuels such as wood, charcoal, and animal dung. These methods not only contribute to deforestation and greenhouse gas emissions but also pose severe health risks due to indoor air pollution. Nyalore Impact emerged as a beacon of hope, offering a path towards a cleaner, healthier, and more sustainable future.

A Mission to Revolutionize Clean Cooking

At the heart of Nyalore Impact’s mission is the belief that access to clean cooking solutions is not just an environmental imperative but also a fundamental human right. The company’s primary goal is to revolutionize cooking in low-income households and marginalized communities by providing cost-effective, environmentally friendly, and sustainable cooking solutions that improve overall health, minimize negative environmental impacts, and promote economic growth.

To achieve this ambitious vision, Nyalore Impact specializes in the sale and distribution of electric cookstoves, with a particular focus on the innovative Electric Pressure Cookers (EPCs). These cutting-edge appliances offer a host of benefits, including:

• Significant reduction in indoor air pollution, thereby improving respiratory health and reducing the risk of diseases associated with exposure to harmful smoke.
• Substantial time savings, allowing women and girls to pursue educational and economic opportunities that were previously limited by the time-consuming nature of traditional cooking methods.
• Decreased dependence on biomass fuels, contributing to the preservation of forests and the reduction of greenhouse gas emissions.
• Cost-effectiveness, as the use of electricity for cooking reduces the financial burden associated with purchasing or collecting traditional fuels.

Making a Tangible Impact

Since its inception, Nyalore Impact has made remarkable strides in bringing clean cooking solutions to underserved communities. To date, the company has successfully provided over 50,000 rural Kenyan households with clean cookstoves, directly improving the lives of countless individuals and families.

The impact of their work extends far beyond the immediate benefits of clean cooking. By reducing indoor air pollution and the associated health risks, Nyalore Impact has contributed to a significant decrease in respiratory illnesses among women and children, who are often disproportionately affected by the adverse effects of traditional cooking methods.

Moreover, the company’s initiatives have supported local efforts to conserve the environment and combat deforestation. By offering sustainable alternatives to biomass fuels, Nyalore Impact has alleviated the pressure on Kenya’s forests, allowing for the regeneration of valuable ecosystems and the preservation of biodiversity.

A Partnership Forged in Shared Values

Our paths crossed with Nyalore Impact during the transformative Pika na Power event organized by Kenya Power and Lighting company (KPLC) in collaboration with MECS. This event brought together clean cooking and carbon market experts with stakeholders from various sectors to explore sustainable energy solutions and address the pressing environmental challenges of our time.

As we engaged in thought-provoking discussions and witnessed the groundbreaking work being done by organizations like Nyalore Impact, we were deeply inspired by their commitment to driving positive change through technology and community empowerment. Impressed by our own dedication to technological excellence and environmental integrity, Dorothy reached out to Verst Carbon in February, setting the stage for a partnership that would soon prove to be a first of its kind in the clean cooking sector.

Looking Ahead: A Bold Vision

As we embark on this exciting journey together, Nyalore Impact and Verst Carbon have set our sights on an ambitious goal: to distribute 10,000 Electric Pressure Cookers (EPCs) to households in rural Kenya by the end of this year. This bold vision represents a significant step forward in our mission to expand access to clean cooking solutions and create lasting, positive change in the lives of countless individuals and communities.

Through our combined expertise, technological innovation, and deep understanding of local contexts, we are confident in our ability to achieve this target and lay the foundation for even greater impact in the years to come. By leveraging cutting-edge digital solutions and fostering strong partnerships with key stakeholders, we aim to create a scalable and sustainable model for the widespread adoption of clean cooking technologies.

An Invitation to Join the Journey

As we share the story of our partnership with Nyalore Impact, we invite you to join us on this transformative journey. In the coming days, we will delve deeper into our Digtial Monitoring, Reporting, and Verification (dMRV) technology that underpin our collaboration, the positive impacts on communities, and the ways in which you can support and contribute to this vital cause.

The post Verst Carbon Partners with Nyalore Impact to Scale Clean Cooking in Rural Kenya: Part 1 first appeared on Verst Carbon.

Our launch took place during the ‘Building the Foundations of Africa’s Carbon Markets with Integrity’ side event and was graced by a distinguished panel of experts across the carbon market landscape. Moderated by the the Rockefeller Foundation’s VP of Africa William Asiko, the panel included Ms. Annette Nazareth, Chair of ICVCM; Brian Nyangena our CEO; Gillian Caldwell from USAID; Tariye Gbadegesin of ARM-Harith Infrastructure Investment LTD and VCMI; Judith Simon from Verra; Paul Muthaura of the Africa Carbon Markets Initiative (ACMI); Ms. Sophie Odupoy from KOKO Networks; and Lydia Sheldrake from VCMI. Each panelist brought their unique perspective and expertise to the discussion, focusing on the development, integrity, and regulation of carbon markets in Africa.

The Verst Carbon Platform

The Verst Carbon platform is a holistic solution that convenes investors, project developers, auditors, and other key players in the carbon market ecosystem for effective collaboration. Our focus is on nurturing effective collaboration to support carbon projects in Africa, ensuring the utmost integrity and adherence to global standards, as well as the equitable distribution of benefits to communities.

As a technology enabler in the VCM, Verst Carbon’s mission is to alleviate the bottlenecks that have traditionally prevented African carbon projects from accessing global carbon finance. We have achieved this through the following innovative and pioneering solutions available on the Verst Carbon platform:

1. Bridging Access to Carbon Markets in Africa

Our solution: Project Development Support Platform

At Verst Carbon, we’re addressing the critical challenge of limited access to carbon finance for African projects. Our platform uniquely brings together diverse stakeholders in the carbon market, enabling effective collaboration. We provide project owners with real-time guidance and access to a comprehensive network of professionals, including project developers, consultants, VVBs, MRV auditors, investors, and buyers. This initiative is a vital step in unlocking Africa’s vast carbon potential.

2. Empowering New Developers with AI 

Our solution: Verstie ‘Carbon Buddy’ chatbot 

Understanding the hurdles faced by first-time carbon project developers, particularly in Africa, we developed the Verstie ‘Carbon Buddy’ AI chatbot. This AI-powered tool offers 24/7 guidance, supporting developers throughout their project development journey. It’s an essential resource for newcomers to the carbon market, providing them with critical insights and assistance.

3. Making Carbon Project Documentation Affordable 

Our solution: AI-assisted PDD Generation Tool 

Acknowledging the prohibitive costs of preparing Project Design Documents (PDD) for carbon projects, we at Verst Carbon introduced a PDD generation tool that reduces these costs by up to 90%. This dramatic cost reduction democratizes access to the carbon markets, allowing more developers to partake in these important environmental initiatives.

4. Enhancing Integrity and Reducing Monitoring Costs in Carbon Projects 

Our solution: Pioneering Digital Monitoring Reporting and Verification (dMRV)

Verst Carbon is part of the Africa Carbon Markets Initiative (ACMI) Monitoring Reporting and Verification (MRV) working group, where we are pioneering the use of technologies like IoT devices, satellite imagery, AI, and machine learning for remote impact quantification. This approach ensures the integrity of carbon projects is verifiable and reduces the costs of monitoring at scale. 

Verst Carbon stands out in its commitment to quality African carbon credit projects, offering a transparent, equitable, and inclusive platform for supporting African carbon projects. Each project on our platform is held to the highest standards, focusing not just on emission reduction or removal, but also on delivering tangible co-benefits that contribute meaningfully to the welfare of the communities involved.

Our launch marks not only a significant stride for Verst Carbon but also a major advancement for Africa’s carbon markets. We are set to be a key player in shaping the region’s carbon trading future, ensuring integrity and equitable sharing of benefits in a region grappling with the worst effects of climate change. We invite you to experience the difference Verst Carbon makes – try out our platform today and be a part of this transformative journey.

The post Verst Carbon Launches its Innovative Carbon Project Development Support Platform at COP28 first appeared on Verst Carbon.

A Closer Look at the Amendment

The Climate Change (Amendment) Bill 2023, proposed by the Ministry of Environment, Climate Change, and Forestry, offers several key improvements to Kenya’s existing environmental regulations. The proposed amendment represents an effort to ratify the Climate Change Act 2016 and to address any existing gaps within it. 

The amendment proposes the development, management, implementation, and regulation of mechanisms to enhance climate change resilience, low-carbon development, and sustainable development in Kenya. 

Some of the clauses that stood out for us in the amendment include:

1. The Focus on Carbon Markets and Inclusive Benefit-Sharing Mechanisms

The proposed amendment lays emphasis on the role of carbon markets. It provides a mechanism for public and private entities to transfer and transact emission reduction units, mitigation outcomes, or offsets generated through carbon initiatives, programmes, and projects​​. The Bill’s provision for benefit-sharing mechanisms in carbon markets ensures that the benefits of climate change initiatives are equitably distributed. This approach can serve as a model for other African countries, encouraging them to ensure that both public and private entities are appropriately rewarded for their efforts toward mitigating carbon emissions.

2. Alignment with International Goals

By aligning with the goals of the Paris Agreement, Kenya demonstrates its commitment to international climate change objectives. Not only does this foster shared responsibility and collective action to tackle global issues like climate change, but it also allows African countries to tap into international funding and technology transfers. These resources help them implement sustainable strategies and increase their resilience against climate change impacts.

3. Embracing Nature-Based Solutions

One of the standout aspects of this amendment is its focus on nature-based solutions to address climate change, human health, food and water security, and disaster risk reduction effectively. It underscores the importance of actions to protect, sustainably manage, or restore natural ecosystems, simultaneously providing human well-being and biodiversity benefits​​.

The bill also seeks to reduce emissions from deforestation and forest degradation, enhance forest carbon stock at national and sub-national levels, and includes activities that reduce greenhouse gas emissions through the sustainable management of forests and the conservation and enhancement of forest carbon stocks.

4. Public Participation

The Kenyan government’s approach of inviting public comments and inputs on the proposed amendment emphasizes the role of citizens in shaping the country’s environmental policy. This strategy encourages public ownership of climate change policies and fosters a collective responsibility towards environmental conservation.

Kenya’s Ministry of Environment, Climate Change, and Forestry set a deadline of May 26, 2023, for public participation. Virtual public meetings were held between May 10 and May 24, 2023, to discuss the proposed amendment and receive input from the public. We are pleased to add that we at Verst Carbon also submitted our views on the proposed Climate Change Amendment Bill and are awaiting the ratification of the bill. This inclusive approach ensures that the views of all stakeholders are taken into consideration in the development of climate change policies.

5. Fostering Public and Private Sector Collaboration

A key aspect of the proposed amendment is the involvement of both the public and private sectors in the implementation of non-market approaches. These approaches aim to promote mitigation and adaptation ambition, enhance public and private sector participation in the implementation of nationally determined contributions, and enable opportunities for coordination across instruments and relevant institutional arrangements​​.

Moreover, the Act will allow public and private entities to participate in carbon markets, fostering the transfer and transaction of emission reduction units, mitigation outcomes, and offsets generated through various initiatives, programs, and projects.

A Model for African Countries

The proposed Climate Change (Amendment) Bill 2023 represents a significant step forward in Kenya’s climate change mitigation and adaptation strategies. By incorporating nature-based solutions, engaging both the public and private sectors, and promoting public participation, Kenya is setting a holistic and inclusive blueprint for other nations on the continent. The success of this bill could pave the way for similar initiatives across the continent, driving Africa towards a more sustainable and resilient future in the face of climate change.

The post Kenya’s Proposed Climate Change Bill Amendment: A Blueprint for African Countries? first appeared on Verst Carbon.

Monitoring, Reporting, and Verification (MRV) is a multi-phase process deployed to quantify the amount of greenhouse gas (GHG) emissions reduced by a specific mitigation activity, such as the use of renewable energy sources, over a period of time. The findings are then reported to an accredited third party, usually a carbon registry, which then verifies the report, and carbon credits are issued upon certification. The goal of MRV is to ensure that emissions reductions or avoidance claims made by project developers are accurate, credible, and verifiable.

The monitoring, reporting, and verification (MRV) of the impact of climate change mitigation activities is a crucial aspect of the project cycle in all carbon standards. However, conventional approaches towards MRV and issuance of emission reduction certificates have been prohibitive for most carbon project developers, especially in developing countries. The costs related to conventional MRV, coupled with low carbon prices and long lead-time have adversely affected the financial feasibility of emission reduction projects on the continent.

Despite the widespread digitalization of various sectors, such as finance, manufacturing, retail, and social media over the past few decades, the MRV process in the carbon market continues to be largely based on manual reporting and verification methods, often relying on reports, checklists, and spreadsheets sent via email. This conventional approach can be time-consuming and error-prone, requiring comprehensive on-site visits for project implementation and meter readings.

So, what is DMRV?

Digital Monitoring, Reporting and Verification or DMRV in short refers to the use of digital technologies to enhance the monitoring, reporting and verification of various environmental and sustainability initiatives. DMRV solutions use a range of digital tools such as remote sensing, machine learning, blockchain technology, mobile applications, and smart sensors to collect, process, analyze, and synthesize data.

In recent years, the rapid expansion of the climate tech sector has led to the availability of a wide range of digital tools, such as enterprise-level greenhouse gas accounting software and remote sensing monitoring platforms. These platforms have the potential to streamline carbon market projects and improve the credibility of MRV results by automating the data capturing and processing process.

Advantages of Digital MRV over Conventional MRV

1. Reduced Costs and Transaction Time

Traditional MRV requires comprehensive on-site visits for project implementation and meter readings, which can be time-consuming and expensive. Digital MRV eliminates the need for on-site inspections, as it allows for remote monitoring and reporting. This reduces the costs associated with MRV, freeing up resources that can be redirected towards other critical aspects of the project.

2. Improved accuracy and transparency 

By automating the data capturing and processing process, digital MRV reduces the risk of human error that is common in manual reporting and verification methods. This, in turn, leads to more accurate and reliable results, improving the credibility of carbon credits. Digital MRV also allows for real-time monitoring and reporting, providing greater transparency in the MRV process and allowing for quicker resolution of any issues that may arise.

3. Reduced Risk of Data Loss and Tampering

Traditional MRV methods often rely on manual data handling, which increases the risk of data loss and tampering. With digital MRV, data can be securely stored and easily accessed, reducing the risk of data loss and ensuring the integrity of data. The implementation of technologies such as blockchain/Distributed Ledger Technology ensures that collected data is immutable, making it less likely for the data to be altered or tampered with. 

4. Scalability

Traditional MRV can become complex and time-consuming as projects grow in size and scale. Digital MRV, on the other hand, is designed to handle large amounts of data and can easily expand to accommodate new projects, making it a more efficient and cost-effective solution for carbon projects of all sizes. This scalability also allows for more streamlined and automated processes, reducing the risk of errors and increasing the accuracy and reliability of MRV results.

DMRV and Credibility

The slow progress in the digitalization of MRV and the carbon market project cycle over the past 15 years could be attributed to the dismal market activity and the reluctance of carbon standards to adopt digital approaches in the past. However, this has been changing in recent years. We are already seeing a massive push from carbon registries, project developers, multilateral institutions and other stakeholders to incorporate and adopt Digital MRV systems and approaches.

Verra, the leading carbon registry, launched a DMRV working group to help identify new approaches to use digital platforms to automate data collection and processing for the development, validation, and verification of VCS projects. In addition to launching a working group, in December 2022 Verra requested for expression of interest from stakeholders wishing to participate in its digital MRV pilot program to support the digitalization of VCS-approved methodologies, project templates, and ERR calculations. Verra has also recently completed public consultations with web3/Blockchain players in the carbon market to establish best practices for the tokenization of carbon credits.

Another registry, Gold standard, has launched three working groups tackling the digital transformation of the Carbon Market, in collaboration with ClimateCHECK and IOTA Foundation. The three working groups are centered around Digital Monitoring, Reporting and Verification (MRV)’, ‘Digital Assets for Climate Impact’, and ‘Digital Infrastructure and Open APIs’

The World Bank has not been left behind in this push for the digitization of MRV. The World Bank Climate Warehouse was set up for the sole purpose of prototyping, testing, and developing end-to-end digital infrastructure for carbon markets. Some of the initiatives being pursued under the climate warehouse include digital MRV systems, a metadata layer (the Climate Action Data Trust), open-source national carbon registries, the ability to issue and track digital carbon assets (native and permissioned tokens), and a one-stop resource platform that enhances knowledge sharing and capability building.

Multiple pilot projects have successfully implemented DMRV systems. Pachama, a leading climate-tech company is piloting a DMRV platform harnessing remote-sensing to measure forest carbon in collaboration with Verra. Technology partners, a fairly new addition to the carbon market ecosystem, have largely been at the forefront in developing and piloting DMRV systems. They include SustainCert, the HBAR Foundation, and Boomitra among others. It is clear that the space is ripe for disruption, with new players expected to trickle in over the next decade.

Conclusion

To fully leverage the cost and time-saving potential of digital technologies, current carbon standards need to be transitioned to incorporate the use of DMRV systems. By utilizing advanced digital MRV, the need for on-site inspections can be reduced or eliminated and the manual checks of data integrity, completeness, and accuracy can be minimized. This can lead to near real-time issuance of certified credits and the associated payments for their delivery.

Carbon projects in Africa have been adversely affected by the lack of validation and verification capacity on the continent. DMRV would go a long way in reducing project development costs and ultimately boosting Africa’s participation in carbon markets. This is why Verst Carbon, under the Africa Carbon Markets Initiative, has been at the forefront of advocating for the digitization of the MRV process. We believe that for the Voluntary Carbon Markets to meet its growth projections, it is vital that highly scalable technologies be adopted to address the growing market.

The post Can Digital-MRV Boost Africa’s participation in the VCM? first appeared on Verst Carbon.

Verra prohibited the practice of creating instruments or tokens based on retired credits (tokenization of carbon credits) in May 2022. This was done to give the registry ample time to consult stakeholders and set up systems for “immobilizing” credits in accounts in the Verra Registry so that they can be tokenized with the transparency and traceability that market participants demand, prevent fraud and uphold environmental integrity.

Verra’s consultation with stakeholders sought input on three main topics: measures to associate verified carbon units (VCUs) with crypto instruments or tokens, know your client (KYC) requirements, and amendments to the registry terms of use relating to anti-fraud. In summary, stakeholders provided the following main points of feedback on the three topics:

1. Measures to associate VCUs with crypto instruments or tokens

The first topic focused on the creation, transfer, and use of VCU-backed crypto instruments and tokens, and the safeguards that should be implemented by Verra to ensure environmental integrity, particularly to prevent double-issuance and double-use.

Stakeholders proposed several measures to ensure environmental integrity, such as tokenizing platforms undergoing rigorous security and accounting audits, embedding metadata into carbon tokens, and using digital measurement, reporting, and verification tools. To prevent double-issuance, stakeholders suggested embedding metadata about the underlying VCU into each carbon token and depositing metadata/hashes of each carbon token into the Verra Registry. To prevent double-use, stakeholders proposed immobilizing VCUs used to generate carbon tokens in the Verra registry and using a trust structure where Verra maintains control over the carbon tokens and holds them in trust for the beneficial owner.

In terms of infrastructure and processes, some stakeholders were not keen on immobilization at all. However, others proposed a form of linkage between the Verra Registry and the blockchain on which the carbon tokens are issued, a specialized account set up in the Verra Registry to hold immobilized VCUs, and technological/automated solutions to link the Verra Registry with the platform.

2. Know your client (KYC) requirements

The second topic focused on the KYC checks that should be applied to platforms before authorizing them to issue, market, and/or transact in crypto instruments or tokens that are backed by VCUs.

Stakeholders suggested two broad categories of KYC checks for platforms. The first category consisted of corporate KYC checks to ascertain the financial standing of the platform, as well as to check for the involvement of sanctioned entities and to run general anti-money laundering checks. The second category of KYC checks is related specifically to the processes and technical operations of the platforms, including cybersecurity audits, information about the processes and carbon footprint of the blockchain and the platform, licenses from local authorities to operate a platform, and the platform’s own KYC policies

3. Amendments to the registry terms of use relating to antifraud

On the third topic, stakeholders proposed several amendments to the Registry Terms of Use (TOU) related to anti-fraud considerations for the association of third-party crypto instruments and tokens with VCUs. Most respondents either did not respond or did not propose any text, instead making general comments on what should be included in the TOU.

These include adding a section in TOU for the approval of Authorized Tokenization Platforms, specifying that the Verra Registry shall take priority over the approved platform in cases of conflict, and stating that Verra is the sole authority capable of reactivating VCUs. Additionally, stakeholders proposed that project proponents should promise to accept a public ID allocated by Verra, use it in communications and blockchain interactions, and ensure that emission reductions can no longer be transacted and become property of the buyer.

WAY FORWARD

Based on the feedback received during the consultation, it seems that Verra will need to consider implementing a range of measures to safeguard the environmental integrity of VCU-backed crypto instruments and tokens. These measures include implementing safeguards to prevent double-issuance and double-use, such as embedding metadata into carbon tokens and linking the tokens to the actual performance of a project. Additionally, Verra will need to consider the infrastructure and processes needed for entities participating in the immobilization approach, such as setting up a specialized account in the Verra Registry to hold immobilized VCUs and possibly creating a digital public ledger built on blockchain technology to record all transactions of Carbon Tokens.

Verra will also need to consider implementing KYC requirements for platforms before authorizing them to issue, market, and/or transact in crypto instruments or tokens that are backed by VCUs. This includes both corporate KYC checks to ascertain the financial standing of the platform and anti-money laundering checks, as well as process and technical KYC checks such as cybersecurity audits, information about the processes and carbon footprint of the blockchain and the platform, and licenses from local authorities to operate a platform.

In terms of amendments to the Registry Terms of Use relating to anti-fraud, Verra will need to consider textual amendments to address anti-fraud considerations related to the association of third-party crypto instruments and tokens with VCUs. This could include clauses such as Verra being the sole authority capable of reactivating VCUs, Verra’s registry taking priority over the approved platform in cases of conflict, and a declaration that only Carbon Tokens that have real VCUs as collateralized assets are deemed valid for trading purposes on the approved platform.

Ultimately, this consultation is expected to result in clarity from Verra on the best and approved practices for players providing blockchain-based solutions in carbon markets. Other registries like Gold Standard have also shown interest in incorporating blockchain-based players in their ecosystems, a positive development for the growing number of climate start-ups that have integrated blockchain technology in their solutions.

The post What next after Verra’s consultation with blockchain players? first appeared on Verst Carbon.