It's 2022 and what was considered a distant future a few years ago has already become present. Talking about the importance of carbon credits is more than necessary, especially given the urgency of issues related to environmental preservation and climate change.
You may already know that our main initiative to generate abundance is to contribute to the country's environmental restoration, right? The Abundance Token is a tree tokenization project to generate new forests, carbon credits and many other socio-environmental benefits.
If you still have any doubts, read on to find out more.
What is a carbon credit?
In simplified terms, we can say that a carbon credit is equivalent to one tonne of CO2 that is no longer emitted into the atmosphere, which helps to prevent pollution and try to control the effects of climate change.
The generation of credits works like digital certificates that can be transferred from one person (individual or company) to another. Thus, the person responsible for planting the trees does not necessarily have to be solely responsible for the credits generated. They can be sold, traded and, of course, used to offset carbon emissions by retiring the carbon credit.
What does the Abundance Token have to do with carbon credits?
Another important detail on this subject is to understand that there are different ways of generating carbon credits, and speaking of forests we can differentiate between REDD+ and ARR.
The first is linked to the preservation of green areas so that they are not deforested and continue to generate oxygen for the atmosphere. The generation of REDD+ credit is linked to the preservation of an area where there is economic pressure for deforestation.
The second is related to initiatives to restore the environment by planting trees, forming new forests and decarbonizing the planet - this is the carbon credit generated with the Abundance Token (ATK). Our first planting made 100,000 trees available for sale, but the goal is to plant 1 billion trees in Brazil by 2030.
Each ATK is backed by a tree, which generates between 0.15 and 0.4 tons of carbon. With tokenization, trees become digital assets and can be transferred between people via the blockchain, which is a huge database where digital information is recorded and crypto-assets are generated that can be traded on the market. The holder of the carbon credit can then use it to comply with environmental programs and offset carbon, or they can choose to trade their credits at some opportune moment.
How is the carbon credit market?
It all started with the first Intergovernmental Panel on Climate Change (or IPCC) in 1988, which was set up to discuss countries' environmental policies and the decarbonization process. After that, several other meetings, conventions and institutions emerged around climate change, which was increasingly becoming an urgent problem.
It can be said that the origin of the carbon credit market comes from COP3 (1997) and the famous Kyoto Protocol, which proposed environmental targets for the participants and created the Clean Development Mechanism (CDM). This idea was transformed into the Sustainable Development Mechanism (SDM), and the UN took it upon itself to establish the SDGs (Sustainable Development Goals) in the 2030 Agenda.
Among the definitions of carbon credits, it was approved that partnerships could be established (between countries, people, companies, etc.) so that the most polluting agents could buy credits from the least polluting ones, trying to achieve a more balanced and less disastrous situation for the planet.
Trading could take place on the regulated and voluntary market, with prices usually varying between $1 and $137 per ton of carbon. In 2020, 229 billion euros were traded, around five times more than the volume traded in 2017 (data from Refinitiv Financial Solutions). Studies that analyze the potential of carbon markets estimate that voluntary markets could increase 15-fold by 2030, and could be worth up to US$ 50 billion (source: Valor Investe).
While the regulated market operates in some countries with limits imposed by the state, the voluntary market continues to develop with companies and individuals interested in generating, selling and buying carbon credits. The ESG trend has given even more strength to this type of transaction, mainly because many organizations need to evolve in this direction.
Has your company started the decarbonization process? Now is the time to act! Take advantage of the Abundance Token solution, which is the most practical and secure way for you or your company.