Environmental Currency: Carbon Crypto Coins?

Opinion, by Alfonso Stefanini

RIO DE JANEIRO, BRAZIL – We live in the anthropocene era and greenhouse gas (GHG) emissions are our Achilles heal, carbon dioxide or “carbon” being enemy number one on the list. 2014 will be the year of the horse, which represents forward movement, so lets hope we trot in the right direction and not swim backwards during the age of Aquarius carrying the anthropogenic emissions baggage on our shoulders.

Financial skeptics always seem to be pointing to the RIP of the global carbon credit markets. But how can it be over, specially when one sector is virtually unexplored: environmental crypto virtual currencies, more specifically for the purpose of this piece, crypto carbon coins or carbon coins?

Bitcoins and Peercoins are some of the names used for the unregulated and decentralized crypto currencies that are giving government-based financial institutions nightmares as people keep buying them in growing numbers across the globe. Prices fluctuate tremendously, and when Bitcoins reached a peak of US$1,200 in Chinese currency markets, that government blocked the sales of virtual currencies via yuag because of national and financial security reasons. Since then, Bitcoins have dropped down to US$380 according to the New York Times.

Crypto, short for cryptography, is the most popular affix used to describe these cyber currencies which are very difficult to hack and steal from someone’s “digital wallet”. Even though this is a geeky way to exchange currencies, Rio de Janeiro based crypto currency consultants explained that crypto coins could potentially start replacing some state-bank currencies, forcing centralized banks to intervene, restrict and impose regulations on this essentially tax-free enterprise that acts like any other global currency with its fluctuations and crashes.

In today’s regular carbon market, one unit of carbon trading emission equals to one metric ton of carbon or one carbon credit. Carbon credits in Europe are presently selling for US$7 and in California for approximately US$13 according to a recent article by the Economist. Being a California Dreamer, I would probably buy my carbon coins there.

Brazil has a voluntary carbon market and its government does have a carbon registry system for enticing United Nation incentive programs like REDD and CDMs to invest within its boundaries.

Companies like FIT Timber Ltd in Roraima, North of Brazil, whose afforestation project produces FSC certified lumber, are in the market for selling carbon credits in the country certified by the American Carbon Registry. They are also looking at producing synthetic biofuels from their timber byproducts, hoping to use this fuel to power their trucks and to incorporate additional carbon credits to their portfolio.

According to the Union of Concerned Scientists, the destruction of tropical forests corresponds to approximately ten percent of the GHG and Brazil and Indonesia are two of the biggest contributors. Sixty percent of Brazil’s total carbon emissions come from deforestation, agriculture and slash and burn practices, not to mention hydroelectric dam construction, ironically, since dams make Brazil one of the cleanest renewable electricity producing countries in the world.

Projects such as FIT Timber Ltd mentioned above are an alternative to the illegal timber trade in Brazil. They also provide educational programs to local communities, making it a real viable candidate for programmers designing and “mining” crypto currencies based on carbon credits.

Carbon coins could hypothetically be backed up by peer-review and pegged by the total anthropogenic amount of CO2 already found in our atmosphere, not by gold, making the end-users the most important component in deciding if the business is sustainable and leaving institutions or governments out of this individuals decision-making process. After all, there is so much GHG emission that can go into our atmosphere before critical mass turns the ocean into a bowl of lukewarm soup.

The more sustainable the project, the more valuable the carbon coin should be. Hypothetically carbon coins would encompass real projects, outside the confines of an office space, such as a reforestation project that adds value to local communities whose business models strides to champion healthy ecosystems, where carbon emission is sequestered.

It is very difficult to measure all the components of carbon emissions and carbon credits for particular carbon projects. The hope is that carbon coins would help demystify a market that is very complex to the common man, making the use of crypto carbon currencies a democratic bottom-up approach for putting your money where your mouth is at.

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Alfonso Stefanini has an MA in International Environmental Policy from the Monterey Institute of International Studies in California and a BA from Hampshire College. Alfonso lives in Rio de Janeiro, and he can be reached at: [email protected].