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How JustCarbon Works
The current carbon market seems pretty established. So why does JustCarbon need to exist? And how does our process differ from existing practices?
Firstly, whilst the market is only two decades old, it’s surprisingly low-tech. Verification is completed manually, credits are bought and sold over the phone and registries are nothing fancier than basic databases.
Secondly, too much emphasis has been placed on the co-benefits, which are the enemy of liquidity. Of course, the co-benefits are important, but if the market was more liquid they would benefit more people and at a greater scale anyway. Currently, the people who benefit the most from selling based on co-benefits are the brokers and retailers, not the Project Developers, since matching buyers and sellers is much more manual and, therefore, costly. This means fewer funds are reinvested back into more climate action.
Thirdly, there’s no agreed price for carbon credits. Since the market is illiquid, manual, and localized, the price varies wildly depending on where you buy from.
Lastly, buyers find it difficult to enter the market. They want to support climate action and offset their emissions, but a Google search (where most start) will just take you to the website of a broker or a retailer.
We have identified the market wants certainty, ease, and speed, which a tokenized marketplace allows for. JustCarbon has been built to resolve all these issues in an easy-to-use platform backed by a highly robust blockchain.
- 1.Anyone who has an offset they wish to turn into a JustCarbon Retirement Unit (JCR), be they a Project Developer, a broker/retailer, or a previous buyer whose circumstances changed, applies to list their inventory on our platform.
- 2.We undertake a selection process that ensures their offsets meet the definition of carbon removal and adhere to our quality criteria.
- 3.A JCR is minted for each verified metric tonne that the seller lists.
- 4.If the offset exists as a carbon credit in the existing market, the credit is retired from the registry, so the only place it now physically exists is on JustCarbon’s secure blockchain as a JCR.
- 5.The owner then either sells their JCR via the JustCarbon platform or trades it on any other reputable exchange. The JustCarbon platform includes a simple ‘buy and burn’ feature for anyone who wants to simply reduce their or their organization’s carbon footprint without delving into the features of the exchange.
- 6.An Automated Market Maker (AMM) will calculate the price at any given time, which will allow any exchange to list with a globally accepted, homogenous value.
- 7.New owners can either store their JCRs, bridge them to their chain of choice to store them in their own wallet, trade them on their preferred exchange, or ‘burn’ (i.e. retire) their JCR to offset their carbon footprint.
In many respects, JustCarbon is turning CO2 removal into an asset or a commodity. In fact, you will physically own the underlying asset of the removed tonne of carbon by holding the only real-world manifestation of it, which is the JCR.
This approach also leads to fair pricing, with all sellers benefiting from price certainty, including the Project Developers, meaning more money being reinvested back into further climate action.
Mark Carney’s Taskforce for Scaling Voluntary Carbon Markets has highlighted that the price needs to grow to $120 a tonne (up from as little as $8 today) to stimulate production to necessary levels. In that sense, traders and speculators betting on this price rise will help the market in the short term, which will in turn encourage more Project Developers to enter the market.
Although the industry doesn’t define them as such, there is a clear distinction between avoidance/reduction and removal. A good analogy to understand the difference is a sinking boat.
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.
This is our first point of difference as a platform, the fact that we will define exactly what CO2 removal involves and make it easier for the market to buy removals specifically.