That’s why carbon credits have been on the radar in all sectors – not just the obvious ones like energy, agriculture, and forestry.
And one of those industries is blockchain technology.
The strengths of blockchain technology, such as its transparency, secure record-keeping, and decentralization are advantages for carbon credits.
That’s why many carbon crypto companies are already in the works. There’s a massive opportunity here for two of the biggest current investment trends to develop their synergies.
With that said, let’s take a look at what some of the most promising carbon crypto companies for 2023 are.
Topping our list is one of the first big movers in the crypto carbon space: KlimaDAO, also known by their coin KLIMA. Its goal is to accelerate the speed at which the price of emitting carbon is going up. And that’s by buying and retiring carbon offsets.
How are they doing this?
First, carbon offset credits are purchased from Verra’s Verified Carbon Standard registry, which ensures their quality. These credits are retired, and then minted as tokens via the Toucan Protocol (more on this later). These tokens are known as Base Carbon Tonnes (BCTs).
- Each BCT represents one tonne of carbon removed from the atmosphere.
Each KLIMA coin is backed by at least one Base Carbon Tonnes. Owners of KLIMA coins are incentivized to grow their share of the coin through bonding more BCT or staking their holdings for yield.
There’s a lot to unpack when it comes to KlimaDAO, but the impact it’s had so far is undeniable. Last year, KlimaDAO bought up 2% of the entire voluntary carbon market. And as of the time of writing, KlimaDAO has retired 17.3 million tonnes of carbon offsets:
That’s as much as a small country like Croatia emits each year.
While KlimaDAO provides a price floor for the voluntary carbon markets, its success will not be decided by how well the voluntary carbon markets do. As with all crypto projects, the most important factor is whether or not people actually want to adopt it.
KlimaDAO is still in a growth phase, so to speak, as it seeks to expand its treasury and provide a more robust supply. The coin’s developers don’t expect a stable price to be reached until mid-century.
Still, KLIMA has been deployed for over a year now and has already made a big splash on the carbon markets. Many other carbon crypto projects are still stuck in the development phase. KlimaDAO may have an ambitious goal, but they’ve shown that their business model has legs to stand on.
2. Toucan Protocol
As mentioned in our discussion about KlimaDAO earlier, the Toucan Protocol isn’t a coin in and of itself. What it is, instead, is the infrastructure that helps crypto carbon projects like KlimaDAO exist.
Simply put, Toucan is a bridging protocol that turns real-life carbon credits into tokens that can actually be used on a blockchain. These tokens, referred to as Tokenized CO2 or TCO2, represent retired but yet unclaimed carbon offsets.
They’re retired from their source registry to prevent double counting, but haven’t actually been claimed against any emissions yet. And so still represent a specific amount of verified carbon offsets.
- TCO2s are semi-fungible – they’re not all identical, as information about each credit’s origin is directly encoded on-chain. Still, similar credits can be fractionalized and grouped into carbon pools, where they can be traded.
The largest and most well-known carbon pool utilizing the Toucan Protocol would be the Base Carbon Tonne (BCT) used by KlimaDAO.
The bulk of carbon credits bridged by Toucan has gone to the BCT pool comprised of Ethereum Request for Comment 20 (ERC-20) tokens.
These ERC-20 tokens can be directly integrated into other DeFi applications.
Toucan was the first platform to allow for the tokenization of carbon credits, and they have several partners besides just KlimaDAO. They have a first-mover advantage in this space and have created their own in-house token, the Nature Carbon Tonne (NCT) for carbon credit buyers.
With a number of other top carbon crypto companies choosing to build on Toucan’s infrastructure instead of developing their own, there’s much potential for future growth here.
Similar to Toucan, Moss is all about the tokenization of carbon related real life assets.
A Brazilian company, Moss has their own token, the MCO2 token, which is created by tokenizing verified carbon credits from sources like Verra. Each MCO2 token represents one tonne of carbon offset, with a particular focus on credits generated from forest preservation projects in the Amazon rainforest.
With its token, Moss is focused on providing a platform for companies and individuals interested in offsetting their carbon emissions to purchase high-quality, fully transparent carbon credits.
Moss also has a secondary Amazon Forest NFT project.
Moss first bought up several parcels of land in the Amazon rainforest, split them into 1-hectare lots, and then sold them as NFTs.
The funds from each NFT sale have gone towards a 30-year preservation fund that will cover the costs of activities like patrolling and satellite imagery to protect the area.
The end goal of this project would be to create a “green wall” around part of the Amazon rainforest to block deforestation efforts. Moss has sold out three sets of these NFTs, and more releases are on the way.
With several Brazilian carbon credit contracts locked in for MCO2 token supply in addition to their sold-out NFT series, Moss is another one of the few carbon related cryptos firms that’s actually deployed a successful solution to the markets.
A carbon removal marketplace that focuses on coordinating transactions between small farm-based suppliers and carbon credit buyers, Nori hasn’t actually launched their token yet. Instead, Nori understandably chose to begin by ensuring that their business model was sound and started with a pilot program.
By partnering with U.S. farmers practicing regenerative agriculture, Nori has secured a number of domestic suppliers of high-quality carbon credits. Some of these suppliers are shown below:
The top layer of soil is actually one of mother nature’s largest natural carbon sinks, containing three times as much carbon as the entire atmosphere.
However, human farming has been causing carbon to be released from the soil much faster than the rate at which it’s being replaced.
This soil carbon loss is what Nori targets, with their focus on regenerative farming projects. The end goal of each project is a form of carbon sequestration known as soil carbon storage, which produces carbon credits.
These carbon credits make up Nori’s primary asset, the Nori Carbon Removal Tonne (NRT).
Each NRT represents one tonne of removed CO2, stored for a minimum of ten years and is independently verified and audited to ensure each NRT truly represents one tonne of carbon sequestered properly.
Moving forward, Nori plans not only to expand their supply partnerships to international farms, but also intends to tokenize their NRTs into NORI tokens.
These NORI tokens will be deployed on the sustainable Polygon network. This creates an accessible secondary market for Nori’s NRTs with all the associated benefits of being on a blockchain.
Polygon is a leading Layer 2 Ethereum solution and is currently the 10th largest cryptocurrency by market capitalization.
Polygon partnered with KlimaDAO early last year to go carbon negative by purchasing – these names might be familiar – BCT and MCO2 tokens.
With their business model proven by their pilot program, Nori has partnered with Bayer AG. It’s one of the largest pharmaceutical and agricultural companies in the world, to scale up their NRT supply.
- The initial tranche of their agreement, valued at $14.4 million, covers 400,000 acres of farmland.
Nori plans to deploy their token later this year. This launch, coupled with their Bayer partnership, should make 2023 a very exciting year for Nori.
Rounding out our list of crypto carbon companies to watch is one that’s a bit less strongly focused on crypto.
DevvStream, at first glance, is a carbon streaming company that provides capital for carbon credit projects in exchange for a share of production down the road.
Where the crypto comes in, however, is thanks to DevvStream’s relationship with its parent company, Devvio.
Devvio has a proprietary blockchain-based ESG platform that DevvStream uses to put the carbon credits it gets from its streaming agreements on-chain.
- Once on the platform, DevvStream’s carbon credits gain many of the benefits that other carbon token projects enjoy.
In addition to this, DevvStream gets priority access to Devvio’s commercial clientele who are already using the latter’s ESG platform. If any of these customers happen to be looking for carbon credits, DevvStream’s will be the first they check.
On top of this, DevvStream has also partnered with the largest voluntary carbon exchange in the world, Xpansiv. The goal is to provide additional liquidity for its carbon credits.
With its access to Devvio’s blockchain ESG platform and clients, as well as Xpansiv’s carbon credit exchange, DevvStream is uniquely positioned among the top carbon crypto companies to make the most of the carbon credits it’s putting on the blockchain.