Carbon NFT's

Definition

Tokens that have individually unique properties and traits. These are called non-fungible tokens (NFTs). NFTs are now best known as a way to collect and speculate on the value of unique art, but this enabling technology can add any type of unique asset to a distributed database. Just Like fungible token, NFT's are tradeable.

NFT's Address Quality Variance

A ton of carbon removed is currently a commodity. But there is a massive difference in quality between verifiable, long-duration and net-efficient activities such as direct air capture using green energy and harder-to-verify activities in forestry conservation. A carbon removal credit that is put on chain and made into an NFT can be priced to reflect the underlying quality of the sequestration. Matching price and quality can unleash the necessary market forces to incentivize the generation of high-quality credits. Over time, the market can demand different quality minimums.

NFT's Address Traceability

When a company buys a carbon credit today it has to trust that the ton sequestered was sold only once and not counted twice. In certain cases, there also has to be trust that the company that purchased the offset will retire the credit and not resell it. Since NFTs are programmable, they can be coded to be retired, or “burned,” after consumption. This verifies sole sale. This burning allows purchasers of offsets to see the amount of carbon credits consumed, allowing them to compare prices and compete effectively. This also allows market participants to speculate more easily on the pricing of varying quality. For example, they can lock in current pricing by forward buying credits and not burning them.