How Carbon Offsetting Works
JustCarbon is a platform revolutionizing the way in which carbon offsetting projects are funded by creating a friction-free marketplace for trading in high-quality carbon removal assets.
Developers of high-quality carbon removal projects can list their assets (tonnes of carbon removed) on the JustCarbon platform. These assets are represented by our JustCarbon Removal token ─ the JCR ─ which holders can ‘burn’ to offset their unavoidable carbon emissions.
But how does this work in practice? How can you offset carbon emissions using either carbon credits or JCRs?
Essentially, by buying either a carbon credit or JCR, a business, government or individual is providing funding to a carbon reduction or removal project. Read more about the difference between carbon reduction and removal.
Carbon credits and JCRs represent one tonne of carbon reduced or removed. Buyers can then choose to ‘retire’ or ‘burn’ their carbon credits or JCRs, respectively, in order to offset their carbon.
So, if a business could not help but emit seven tonnes of carbon, for example, they could choose to retire/burn seven carbon credits/JCRs in order to become “carbon neutral” or more than seven to become “carbon negative”.
That’s it, in a nutshell. Carbon offsetting means paying someone to reduce or remove as much or more carbon as you emit. Carbon credits and JCRs are simply a medium of exchange to make it easier.
If you want a deeper understanding of the process involved, read on…
It all starts with a Project Developer creating an activity that reduces or removes atmospheric CO2. To ensure that the project makes a real impact and doesn’t simply create CO2 somewhere else, its methodology and results are approved by an independent ‘Verifier’.
Projects that meet a strict set of standards are awarded a Carbon Credit for every tonne of CO2 they’ve reduced or removed. Up to 60% of the credits awarded each year can be sold to help fund the project, typically through a retailer or broker.
These middlemen charge as much as 30% for the privilege of selling carbon credits and the process is very manual, centralized, and restrictive. This is the part JustCarbon is revolutionizing ─ more on that in a bit.
Brokers also tend to market the credits based on the weight of CO2 and any of the co-benefits, such as enhancing biodiversity. While this sounds useful, it actually confuses the marketplace, reduces liquidity, and leads to wildly fluctuating prices across the world ─ another set of problems JustCarbon solves.
Once a carbon credit has been traded, it is added to a register showing the origins and current ownership of each credit. This sounds fancy but it’s basically just a big database.
Developers then reinvest profits from selling credits into their carbon reduction/removal projects, minus all the broker fees.
When the owner of a carbon credit wants to offset their carbon, they can ‘retire’ them ─ permanently removing their credits from the register.
JustCarbon is essentially replicating the same process but much quicker, cheaper, and more efficiently by cutting out the middlemen. We do this by turning authenticated CO2 removal (currently represented by carbon credits) into a digital token, the JustCarbon Removal Unit (JCR).
Every verified tonne of carbon listed creates, or ‘mints’, a JCR on our secure blockchain, creating a fully-traceable record of creation and ownership.
If the offset already exists as a carbon credit, it is retired from the registry and removed from that market. Now, the only place that offset exists is the JustCarbon blockchain as a JCR.
JustCarbon is only focusing on carbon removal offsets, rather than carbon reduction. Here’s why…
To stop a boat from sinking, you need to plug the holes and bail the water. If too much water gets in, the boat reaches crucial tipping points and sinks. And even when the holes are plugged in, you still need to bail the water.
In fact, if you can bail the water as fast (or faster) as it comes in, you can keep it afloat indefinitely. This is the idea behind carbon removal - if we can find ways to reduce our carbon (plug the holes) and remove existing carbon from the atmosphere (bailing the water) we can gain control of our global net carbon emissions.
Over the last two decades, the focus has been almost entirely on plugging the holes. Yet, global development and industrialization have made the issue significantly worse. So for us, removing the CO2 that persists in the atmosphere is our biggest priority because a) too few people are focusing on it and b) the potential for removal is much greater than the potential for reductions.