Klima DAO, internalizing durable carbon
How can we compare carbon projects in an objective way? Often, individual offsetting projects differ not just in the technology type (which you can learn more about in our previous entry). Factors related to the economic empowerment of local communities, improvements in local air and water quality, and biodiversity gains all are taken into account when Over-The-Counter trades are made between project developers and retailers/brokers of carbon offsets.
That said, there is a core variable related to carbon removal that the Science-Based Targets framework is beginning to explore in relation to the concept of Net Zero: carbon durability. We’ve broken each of these key items down:
- Science-Based Targets Initiative: The SBTi defines and promotes best practice in science-based target setting for carbon emissions. Offering a range of resources and guidance, the SBTi independently assesses and approves companies’ targets in line with its strict criteria. The SBTi is also providing guidance on how organizations can achieve Net Zero
- Net Zero: Net Zero is a state wherein any remaining emissions from an organization are negated via carbon removals. According to the latest report by the Intergovernmental Panel on Climate Change (IPCC), to limit global warming to 1.5°C above pre-industrial levels and avoid the most catastrophic impacts of climate change, the world must halve CO2 emissions by around 2030 and reach net-zero CO2 emissions by mid-century.
- Carbon Durability: This relates to the time that a specified ton of carbon dioxide will remain removed and sequestered from the atmosphere.
Carbon Storage Durability
The durability of carbon removals is becoming a heavily researched topic with heavyweights at institutions such as Oxford University weighing in on the criteria and delving into how different offset technology types can be compared on this metric. Thus, while other metrics for comparing projects could at times be more subjective (taking a range of criteria to determine e.g. social impact, economic co-benefits, etc), carbon durability promises to be a much more objective point of comparison. For example, there are already acknowledged categories from the SBTi:
- Short-term natural solutions with up to 100-year durability, such as forests and soils.
- Medium-term blended solutions with 100- to 1,000-year durability, such as biochar and specific types of carbon dioxide utilization.
- Long-term engineered solutions with more than 1,000-year durability, such as direct air capture and storage, and bioenergy with carbon capture and storage.
In the previous blog, Introducing Klima, Leveraging the Supply of Carbon we discussed a number of the major technology types utilized for carbon offsetting projects. Of the methods outlined, carbon sequestration via reforestation, carbon removal via soil sequestration, and CCUS are of relevance here for the conversation on storage durability. Remember, other outlined methods such as renewable energy are classified as mitigation offsets, meaning that they do not remove existing emissions from the atmosphere but rather prevent additional greenhouse gasses from being emitted.
Toward a carbon offset hierarchy
Given that the ultimate mission of Klima DAO is to build a treasury backed by carbon credits that represent a ton of carbon, it’s logical for us to see carbon durability as an important metric in valuing carbon offsets brought on chain. Thus, while at launch we will utilize pooled assets known as ‘Base Carbon Tonnes’ (BCTs), which can be created from any type of verified carbon unit, in the future we can examine having a hierarchy of tokenized carbon tonnes (TCTs). This hierarchy would govern how many Klima are issuable from 1 TCT of a certain type. For example, TCTs derived from carbon capture and storage (CCS) projects, which are generally quite expensive (> $750/tonne) and can achieve carbon removals in excess of 1,000 years, may be eligible for minting e.g. 50 KLIMA rather than one. Note, this example is purely for illustrative purposes only and is in no way indicative of how or if Klima DAO will actually weight BCTs in the future.
It’s important to recognize that carbon durability research is still very much in development. That said, as we build, we believe it’s important to consider how we can treat technology types differently in the future in order to incentivize users to support projects which remove carbon from the atmosphere over long durations.
At launch, each KLIMA will be backed by 1 tonne of carbon offset. This will always be the case. However, in the future, we may allow certain types of TCTs to be eligible for creating more than 1 KLIMA token, depending on their carbon durability rating. Carbon durability is an evolving area of analysis, but is becoming increasingly important in the voluntary carbon market due to it being a key criteria in the Science Based Targets Net Zero framework. The implications utilizing a carbon durability rating for TCTs are as follows:
1) Incentivizing the crypto market to support carbon offsetting projects which remove carbon from the atmosphere and store it over long durations.
2) Enabling DeFi users to tangibly influence supply of the carbon markets based on their appetite for cost and carbon impact.
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