Crypto enthusiasts are not usually among the top buyers of carbon offsets.
In this case, crypto users did not move into offsets as a way to counteract the enormous emissions associated with mining cryptocurrencies.
Blockchain technology underpinning cryptocurrency can be used to keep a public record of accounts involved in transactions for carbon offsets, even while buyers remain anonymous.
An oil company would have to pay higher prices for offsets derived from more rigorous projects once Toucan’s users helped clear away the worst offenders.
This do-gooder mission attempts to address the scientific problems with the vast majority of projects behind carbon credits, which do not live up to environmental promises, by locking them away from being used.
Since then, more than 2 million credits from Dayingjiang-3 have been converted into what is called a Base Carbon Tonne on Toucan’s platform, each representing a tonne of carbon dioxide supposedly avoided by not burning fossil fuels.
In fact, most of Toucan’s BCTs are based on renewable energy projects that would probably have happened without extra financial support, especially given how quickly the cost of clean energy has fallen in recent years.
They would not be eligible for trading in established markets such as Corsia, a programme run by the airline industry, or on some commodities exchanges that offer carbon offsets contracts, according to Grayson Badgley, a research scientist at CarbonPlan.
The assumption was that there is a finite pool of bad offsets, which could be bought and locked away, allowing good projects to be priced better.
Spiking demand for cheap Verra credits triggered by Toucan and its allies has created new reasons to generate the bad offsets.
Over the past six months alone, Toucan’s platform has been used to scoop up more than 21 million credits verified by Verra.
“We’re not trying to be the standards body that’s creating the criteria by which we measure climate impact,” said John Hoopes, who works on the company’s strategy and ecosystem.
Other attempts to reform the offsets market have run into issues of quality control because it is fundamentally difficult to decide which projects are truly benefiting the planet.
Once a carbon credit from Verra is turned into a BCT token, buyers can do as they please: trade it to someone else, use it to offset a tonne of carbon dioxide , or convert it into other carbon tokens.