In this episode, Zhong, head of research at CoinGecko is joined by Joseph Pallant, Founder and Executive Director of Blockchain for Climate Foundation. Joseph discussed his background in carbon markets and blockchain, the foundation’s work in putting the Paris Agreement on blockchain, and its next step to making an impact on the environment.
[00:01:21] Joseph's background in carbon markets and crypto space
[00:03:44] About Blockchain for Climate Foundation
[00:09:53] What are internationally transferred mitigation outcomes (IMTOs)?
[00:14:47] More on ITMO targets for different countries
[00:17:22] The foundation’s aim and aspects it’s trying to improve
[00:23:02] Clarifications on BITMO and the origin of the name
[00:23:33] Working with government organisations and whitelisting process
[00:26:09] Thoughts on the ITMO issuance process
[00:29:50] Thoughts on private sector involvement
[00:32:12] Will BITMO be tradable in open markets?
[00:34:44] Merging of blockchain and carbon markets
[00:37:27] The foundation's next step and future plans
[00:39:54] Final notes on the foundation
Quotes from the episode:
“Back in 2017, when I sort of fell a second time on to the concept of Ethereum and to the work it was doing, really jumped in both feet recognizing the commonality between carbon markets and how blockchains work” [00:03:14]
“And so we feel by building more transparency, we can get more trust and confidence of the global community to use article 6.2 ITMOs and be able to fund countries and the underlying projects there to help beat climate change.” [00:14:36]
“What kind of magically happened was that this fecund broad Ethereum community was able to create all the tools that we would need to build this tool of our wildest dreams.” [00:25:04]
Watch the Podcast on YouTube
Blockchain for Climate Foundation - https://www.blockchainforclimate.org/
CoinGecko - https://www.coingecko.com/
Blockchain for Climate Foundation:
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Dear audience, thanks for joining us for this episode of the CoinGecko podcast. I'm Zhong, and I'm the head of research here at CoinGecko. Today, we have a very special guest that's joining us, Joseph Pallant on the podcast. Joseph is the director of climate innovation at Ecotrust Canada and founder of the block for climate (foundation). Welcome Joseph and thanks for joining us. Maybe let's start off by you telling us a bit about yourself and your background. You started work in helping to build out carbon credit markets in Canada and a few different places. So, you know, could you tell us a bit about that work and how you eventually found yourself into crypto and blockchain.
Joseph Pallant [00:01:21]:
I'd be delighted, thanks so much Zhong. So, yeah. I'm Joseph Pallant based in Vancouver, Canada, and have been working in the carbon markets for a really long time. It's been 17 years now. I grew up in British Columbia, beautiful place, lots of nature, really fell in love with nature as, it's really an obvious thing to do. And throughout the arc of my schooling and experience, became very deeply committed to helping humanity and nature exists well together. And to find ways where we can really lean in to protect nature. And as climate change became more understood, recognized it as a extremely big threat for humanity and the planet, and also a really strong opportunity for humanity to turn it around and to build the tools both technological, but also really importantly economical and then also in discourse and communication as well, so that we can address these issues. And I was really lucky to sort of fall upon the mechanism of carbon offsets and the carbon market as a way to organize humanity, to help beat climate change because carbon offsets are a very efficient, effective, purpose-built way to connect capital money with the opportunities to get it and keep carbon out of the atmosphere and do that efficiently, do that in a pay for performance way, so you only get carbon offsets and can only sell those when you've actually gotten or kept carbon out of the atmosphere. And so feel very fortunate to fall upon that modality. And that was back in 2004. And so we've had a really amazing opportunity to do real projects on the ground, have done projects in reforestation, in forest conservation, and simply helping people manage forests closer to their own goals and morals and find value both in harvest as well as in the carbon benefit of protection. Back in 2017, when I sort of fell a second time on to the concept of Ethereum and to the work it was doing, really jumped in both feet recognizing the commonality between carbon markets and how blockchains work and how they are very specific about transferring outcomes. Being able to tokenize these outcomes was, was really quite revolutionary. So that's sort of how we got onto the work that we're really focused on today.
Yeah. So you talk about stumbling back onto Ethereum right? In, in 2017. So in 2018, you, you eventually founded the foundation, the blockchain for climate foundation, right? Where the mission is really, you know, it says on the website: To put the Paris agreement on the blockchain. So maybe, maybe before we get into that mission, perhaps tell us a bit about the foundation, what are its goals, how big is it and sort of what sort of projects are you working on now.
Joseph Pallant [00:04:08]:
Thank you. Yeah. So in 2017, when I sort of read an amazing article when I was half asleep recognized the, the clear and obvious fit between my existing work at the time and this work to come and through 2017 spent a lot of time looking for both the right tools and the right use cases, importantly, because, you know, finding the right use case for technology is, is always the trick, and it's always pretty magical when you do. And so after scanning through lots of different things, there was amazing work going on with blockchain and climate back in 2017. There was a group called DAO IPCI that had tokenized offsets as ERC 20 tokens in March of 2017. So people have been doing this for awhile and that work was really inspiring and, what I saw, and this was sort of a combination of looking around at the marketplace and the competitive landscape. And then also what I was seeing in my sort of previous and regular world of being in the carbon market was that we had a really strong opportunity to try to put Paris agreement carbon markets on the blockchain, speed up the time to the start of those carbon markets. And then basically have them be running on a very efficient, effective tooling of blockchain, rather than simply going back to sort of recapitulating their old models and markets from a decade before that. So can talk more about those details in a bit, but it was really finding the use case, which is we really need to work to put Paris on the blockchain and sort of spoiler alert now, four and a half years later, four, four and a half years later, we just finally got Paris agreement, its rule book agreed upon at COP26 in Glasgow. And so what that means is the sort of page and a half of the broad strokes of the Paris agreement carbon market that were agreed upon in gosh, 2015 in Paris is now brought to ground as a much bigger article and it's ready to move forward. And so that use case, plus it was really the landing of ERC 721 non-fungible tokens that landed at least in my eyes in many people's eyes at the time or in our experience, as CryptoKitties. And being based in Vancouver, we had the good fortune of actually having the CryptoKitties guys come to our literally underground cryptocurrency members' club decontrol down under the sidewalk underground in downtown Vancouver, you know, a week after launch. And they're telling us about this amazing tool. People have already been exploring it. And buying it. They're having to hop out and like fix techs, tech issues in between breaks and their presentation and stuff like that. And so what really crystallized there, and led to the formalization of the blockchain for climate foundation was that we now had a tool that could carry all of that details of a carbon offset project, which are myriad, they're massive. Carbon offsets are a intangible environmental asset created from a whole long process of science, offset standards and methodologies, actually doing a project and then proving the climate benefit of that. And so the ability to capture all of that and have it attached to each token, seemed really important to me for even movement of one token and organizing of one token, let alone what we were going to see in the Paris agreement, which would hopefully be tens of thousands and hundreds of thousands of projects, if we're going to, you know, save the planet then it'll have roll it in that kind of scale. And so we didn't see that the sort of pooling of everything just into a pool was necessarily going to work as the technical underpinnings and architecture for this bigger program. And so with ERC 721, we got a lot of the way there because now instead of eye color or background color or tail bushiness, we can put in the project location, project name, vintage descriptions of the project. And so this was really that the two things that came together to realize, hey, we've got something going here, let's build a team, let's build a organization. And so we established as a fairly. Light client BC member funded not-for-profit and we had an initial starting team of five really great folks sort of from both the climate space and the blockchain space. And that was sort of back at end of 2017, early 2018. And from there we've, we've grown our sort of biggest team sizes around sort of 20 to 23. And that includes myself, which is working on this a good chunk of my time. And all the way over to folks who are doing this purely volunteer and able to lend a hand every little once in a while. Yeah, I think that's, that's one way to encapsulate that, that launch, and the thing that's been really neat about blockchain for climate foundation is we've managed to keep a pretty strong firm, focus on putting Paris agreement on the blockchain, putting Paris agreement on Ethereum. Our goal and our mission has been fairly tight. And so. I'm quite proud that we've been able to do this. I think it's shown really significant results. And it's been interesting as a fairly expansively named group, really focusing on this one specific thing. And, you know, we've been pulled into this discussion around climate impact of the NFTs and then of Bitcoin and getting pulled into really amazing stuff. This sort of refi autumn, I'll just claim that right now. It's sort of late 2021 has been a huge, a fusion of amazing projects in the climate and blockchain space. And it's just such a treasure and an honor to be here and really exciting for what's being built right now and what comes next.
That's good, right? Because when you're able to keep like a very strong focus, it helps deliver outcomes faster and the team knows what you're sort of working towards and what's like the ultimate goal that everyone aligns to. I had two questions coming out of, of what you just described. I think the first question is around the carbon credits that you mentioned. So I think the technical term for this, at least the ones that I see on the website and in the Paris agreement is something called ITMOs, right? Internationally transferred mitigation outcomes, which is a bit of a mouthful. Maybe, could you just explain to us, you know, from a layman's perspective, I guess, so are these the same as the, essentially the same as the voluntary carbon credits that we see in the VCM, the voluntary carbon markets, or this is sort of something else entirely?
Joseph Pallant [00:10:29]:
Great question. And definitely difficult to parse out from the discussion. So ITMOs are the name for carbon credits of the Paris agreement. So the most simple level it's sort of understandable like that. They have a couple of fundamentals. So one, is that they're created through one of two pathways, either articles, 6.2 or 6.4 The creation process and the environmental asset is going to be a lot like the carbon offset that you normally think of that we have in the voluntary carbon market right now, or compliance carbon markets right now. The project is created by a project developer or a project proponent. They work through the creation standards, documentation, and then auditing processes, create an offset. And then in article 6.4's point, there's going to be one basically standard set up and housed at the UN framework convention on climate change secretariat I believe, and that will have the rules for what an article 6.4 ITMO is. In addition to that, there is the aspect of creating a corresponding adjustment. And so this is some of the geekery around what we're trying to specifically build with the BITMO platform at blockchain for climate is that in order to have this international carbon market and have it be a tool of the Paris agreement, if we reduce emissions in one country and turn those into ITMOs or into credits and sell them to a different country, we actually need to have them removed off country A's carbon footprint and added on, or in this case subtracted cause it's reductions to country B. So if you didn't do that, we call it corresponding adjustments, then you would really double count those emission reductions because you'd count them in the host country and then the buyer country. So it's kind of simple. You just need to do proper double entry bookkeeping. If I'm giving you this, I need to remove it off my sheet. It's not really that conceptually hard, but it's an important detail that doesn't exist in the voluntary carbon market when it comes to where the country of the emission reduction and eventual retirement or burning of, of those credits go. And so that will be the one difference for article 6, sort of a major difference, for article 6.4 ITMOs. Now the other kind of ITMOs and the one that we're focused on at the moment with the BITMO platform is actually through article 6.2, which is a fairly different, I would say, novel mechanism, which is that national governments can look to emission reduction outcomes that they achieve in country, or that they are going to be able to set up a contract to take in capital achieve and then hand the benefit back over to the people who provided the capital for emission reduction outcomes achieved in country. Though we've gotten a lot more clarity with article 6 rulebook, Paris rule book. There's still going to be a lot of variability in the quality of article 6.2 credits and quality in terms of, you know, is it good or not? But then also quality and in terms of what evidence is built in? How have they gone about it? How is the state of trust in the marketplace for these emission reduction outcomes? And so one of the main BITMO that we're trying to achieve with the bitmap platform is a tool to increase the transparency around the quality and more importantly, the sort of qualities of these articles, 6.2 ITMOs. And by having our platform, which issues these tokens as a non-fungible token and put sort of the highline, important, sortable information as characteristics right on kind of the face of the NFT as it were. You can see it in our platform, you can see it on OpenSea when you open up characteristics. That will allow for a sorting and a transparency or a first step of transparency around the quality and qualities of these credits. Each of them, we also are able to attach the sort of hundreds of pages of PDF so that you can dig in and look at this information once you've sorted it to where you want to be. And so. We, we feel that what we're building is going to be really helpful for both on a sort of offense and a defense side for ITMOs where it's going to help people understand their quality. And I think in doing so, it's going to allow the market to function better and, and open up and have more supply, which is what we want. These are emission reduction outcomes that are helping get and keep carbon out of the atmosphere. And so we feel by building more transparency, we can get more trust and confidence of the global community to use article 6.2 ITMOs and be able to fund countries and the underlying projects there to help beat climate change.
Maybe just a follow on question to that before, before I move on to the next thing. I guess when you talk about article 6.2 ITMOs and these are essentially country-specific right? So Malaysia would have one and Canada would have one. Are these are these sort of targets that countries want to hit every year? And then they figure out how much ITMOs the they want to achieve and then they sort of parcel it out to the individual projects? Is that the way to think about it? And sort of, we can treat allowances between us. So, say if Canada is doing really well and Malaysia needs some additional head room, I guess Malaysia can sort of buy or purchase ITMOs from Canada.
Joseph Pallant [00:15:24]:
Yeah. Part of that, yes, and part of that, no. So the ability to trade, yes. And so we're candidates to really get going and, and reduce our emissions in line with what we've said we will, and then even better. It remains to be seen how countries will allow these credits to be moved, because really there it's going to be tough for countries to be willing, to let carbon be moved out. And so this is interesting and I think, you know, a certain levels we'll come to that. We'll get to that when we come to that, I think the country should have open borders on this. And be affording the carbon rights and the ability to do these trades to the projects and people that achieve them. And so this is where there's sort of a really interesting connectivity or marriage between projects on the ground. And so that's the part that was a little bit off in your description, which is it's actually the projects on the ground that are achieving real emission reductions and removals. And then for those ones that they are wanting to sell, they basically have to petition the government to say, hey, will you allow us to move these out of country to, to issue them as ITMOs and move them out of country. And we're kind of muddying the water and this description between what articles 6.4 and article 6.2 will look like because article 6.2 is understand to be a bit more sovereign led. So an example could be if Canada was doing really great and had reduced from where we are now 40% reductions and wanted to sell net more than Canadian government could potentially say: "yes, we'll take investment from the government of Malaysia to reduce emissions in country". And Malaysia will own those emission reduction outcomes, they will tokenize us or issue us ITMOs, and hopefully at that point tokenizes BITMOs that can go back to Malaysia for either their sovereign compliance or other types of use there.
Okay, understood. So it really is the projects that are trying to achieve those outcomes, right? Those, those environmental outcomes. But it's the government that sort of decides whether they get to be exported as ITMOs right? To other countries. So that's good.
Joseph Pallant [00:17:18]:
That's quite accurate for article 6 and ITMOs, yes.
[00:17:21] Zhong: Okay. So, so that's good. The other part that I wanted to ask more questions on was, you talked about markets and specifically markets that used to exist, and then the BITMO platform that you guys have built is really trying to be a different kind of market or a new generation of market from, from what you had before. I guess, could you talk us through a bit? You spent so many years on this. What the traditional, I guess, sort of markets look like and how BITMO is sort of going to be different and, and improve on what came before?
Joseph Pallant [00:17:48]:
Ya, that's a great question. I think that the real heart of what we're doing with a bit more platform at Blockchain for Climate is, we are trying to create the underlying or we're trying to evolve the underlying environmental asset and how it exists in the world so that it can be taken up by markets and we can use markets, you know, markets can be used for what they're really good for is connecting buyers and sellers which if you pan out as connecting opportunity to get and keep carbon out of the atmosphere with the money to do it. We are not really currently building any exchange type of tooling in our work. What we're really focused on is creating an amazing tool where countries can come and BITMO-tize. They can come and tokenize their ITMOs either all in one step or as a subsidiary step so that those can reach the market through the blockchain. And I think that this has some pragmatic uses that I believe it will be faster to readiness. So our, our platform is actually live on Ethereum and ready to roll. We could have a government come in today. And it's still early here in British Columbia, evidence that they are the pertinent organization at their country. One of the benefits of doing this appended to the UN system is that there's clarity on who can issue ITMOs and who says so in the government and office at each country. And so we can have our system whitelist or connect with their Ethereum address. And then they could tokenize today on our system. I kind of got on a tangent there, but basically what we're trying to do is enable this issuance of, of ITMOs, which today there's still been zero, unless any have happened in the last couple of weeks, post Paris. And so this is also important is that this environmental asset doesn't exist yet. And now we have article 6 and so I expect them to be coming out quite soon. Nonetheless, we are trying to have this happen faster, and then we are trying to have it benefit from Web3. And so once a national government issues us token, they're not locked in, you know, they're locked in on the blockchain to a certain extent unless they want to take it off. But once they're in, we really see that already there's so many different ways to move this around, to have ownership, to have sort of sovereignty over this, and you're not locked into another exchange or registry platform. And we do think that this ability to create and custody your BITMOs as a national party to the Paris agreement is going to open up a lot of opportunities and it's going to create a lot of freedom with this. And so you would have the option of plugging it back into a traditional exchange. You would have the option of creating your own exchange and having that operate and just be ERC 1155 compliant, the NFT token standard that we use. Yeah, I think that this is important piece as we're trying to inject it, you know, as these are fundamentally public goods that are owned by a government injecting them into the system that people are working so hard to create public goods on, the work of the Gitcoin team and their Gitcoin grants programs which were part of for the next couple days. In funding open source and in funding public goods is really important here. And so, these will be able to connect back out to non-blockchain related markets if they wanted to. So he could do this transfer and then just pull them back out. I also believe and expect, and I think we're already seeing that traditional players are building blockchain capabilities. So I think that there will always be room for the incumbents in the space, for sure. And there's also room for more innovation and more tools and then a lot of real creativity in Web3. And I think one of the things that does has only really become clear in these last couple of months in, you know, that will classify as game changer from blockchain is new sources of demands from regular buyers. And so what we've seen with the launch of Klima DAO and their work to be a carbon black hole for voluntary carbon offsets, where you actually have a carbon offset backed cryptocurrency, is that they've soaked up 15 million tons, pretty much. A voluntary carbon offsets issue through the verified carbon standard, which is a very high quality standard. And so 15 million tons is drop in the bucket in terms of the world, but it's also only been a month and a half, and that's a quarter of British Columbia's annual carbon footprint. That's all of Panama's annual carbon footprint that I've been pulled into this one amazing cryptocurrency system in, you know, a matter of weeks. And so we also do see that by being able to issue us BITMOs that there is this whole burgeoning and really dynamic source of demand that is good for a variety of reasons. I always see it at the heart as this is money that's going to go to getting projects on the ground that can efficiently get and keep carbon out of the atmosphere to do their work, to pay the people, to get the carbon out, to achieve the social and environmental co-benefits of these projects. That's what I see on the other end of this money. Other people see it as: we can really increase the cost of pollution, we can increase the cost of these other compliance instruments, which will put additional pressure on existing emitters to find emission reductions within their own fence line and within their own scope of ability to reduce fundamentally, we need both of those activities, both of those pressures to be in place, if we're going to get where we need to get around climate change.
I, I think we have rant quite far ahead in the conversation, because definitely I was going to ask about Klima DAO later on, but I sort of wanted to come back to that point. So I think just to clarify for the audience, so BITMO is the name of the platform, but BITMO is also sort of the name of the token that's going to be issued right? So every BITMO is sort of one metrics ton carbon of carbon dioxide equivalent, right? You know, sort of offset or reduction that is represented onto the blockchain.
Joseph Pallant [00:23:20]:
That's right. So we put, we put B, you know, for blockchain, internationally transferred mitigation outcome, and also has 'BIT' in the name as it turns out. And so, yes, these are a specific term for a tokenized ITMO on our platform.
Yeah. Maybe to be a bit more technical because you mentioned Ethereum, right? So it's obviously a, a public blockchain, right? But also you mentioned, there are going to be government organizations that you work with, you need to whitelist their addresses. So how is this going to actually work? Like, is it going to be like a, like a permission club on Ethereum where only specific people can, can, can issue ITMOs?
Joseph Pallant [00:23:56]:
I really appreciate the work, the research that you've done into our work, and we have some great videos evidencing, how OG we are from back and say, even 2017 and 2018 around this work. And in the past, we thought they were going to have to do a proof of authority blockchain for this, because with the ERC 721 that we were thinking about, those of course have to be moved one at a time. And so when we're talking about millions of tons per project, and billions and billions plus tons and the whole system, that was not gonna work on open Ethereum. However, With the innovation around ERC 1155 and the ability to tokenize a whole big stack of a million or a billion tokens in one issuance, and then move those either one at a time or a million at a time, we're able to do that aspect on, on Ethereum. What's so magic and why we're such big fans of the Ethereum ecosystem was, back in 2017, we knew enough to realize that, gosh, we're going to have to invent a lot of stuff in order to make our vision for this come true. And this experience of spending time through 2017, 2018, 2019, working on the tech, but also really working on the use case and engaging with national governments. What kind of magically happened was that this fecund broad Ethereum community was able to create all the tools that we would need to build this tool of our wildest dreams. And so that's sort of all really come to pass. And so we have been able to build it on Ethereum. And so it's, it's not a permission blockchain that it would be. It's just basically on Ethereum and the whitelisting is because article 6.2 ITMOs can only be issued by basically 196 national parties. And because those are known entities in the non-blockchain world, we're able to say, you know, if they can evidence that they are these people then they are able to have, and then they share with us what their public key is, then they are allowed to use our system to mint BITMO. And then those can be bought, sold, traded by anybody with an Ethereum wallet, with an ether wallet.
Cool, I think that's also quite interesting, right? There's sort of the open source tooling sort of got built out along the same time while you were sort of working on the use case and it sort of all was able to come together to sort of deliver this, this particular solution. You mentioned about this, this a hundred and ninety, a hundred ninety six signatories, which are going to be the ones issuing ITMOs. I know it's a, it's a voluntary project, and you mentioned that people haven't come on board yet, but I guess from your perspective, which governments, or which countries have been the most open and you think will be the first to jump on to this? And whether you see any challenges with adoption? Are government's going to have to figure out their own private keys? Then it's sort of a problem, even for crypto native well, for new people trying to get into crypto, right?
Joseph Pallant [00:26:39]:
Yeah. Great questions. So it has been a focus of ours to get national governments on side, because of course they are the users to create supply into the system. And, and that's how it works with our article 6.2 through the Paris agreement back and forth between focusing on tech build-out and focusing on government engagement. And we're kind of over these last few months, arking from technological development as we've gotten our platform up, live on Ethereum to engage in with national governments. And ideally we do it all at the same time, but as it happens, it just kind of, it comes and goes. And so we were really lucky to have our colleague Denby McDonell from Ecotrust Canada and Blockchain for Climate attend COP26 this year, the big UN climate summit in Glasgow last month. So she was able to engage with a lot of national governments and a lot of lead negotiators from different countries. And we are now working to engage with them and talk with them hopefully, but this season and then into the spring and into our spring next year, to get them on board. And we have a sort of notional pathway that we're calling the national party working group, where we want to bring government representatives sort of on side and understand what we're doing, demo our work. And really also engage with them about what they want to see in the platform, because there's a lot of fine tuning that can be done and especially how it interfaces with government. And they're the experts, as much as we work to understand all of this and engage really closely, their lead negotiators are in the room and their teams and voluminous folks have all been engaged in this, so we really want to gain from their experience and knowledge of what needs to be built in and then walk them down the path to becoming champions and eventual users of our platform. There was a big shift last month, where article 6 rulebook was achieved, was created. And so before that, this was all kind of a little bit notional because you couldn't yet actually issue ITMOs. And we weren't successful in our goal of maybe we can get people even out ahead of Paris rulebook using our platform, but now that, that has been signed, we're really seeing, hoping, seeing, expecting that there will be this uptake in government engagement, because there are lots of governments that want to be part of the system. There are natural buyers who are countries who've made strong climate commitments that are going to have a really hard time eating that in country. And they want this system to work. There are countries that are natural sellers that have. Amazing opportunities to onboard capital and getting key carbon or the atmosphere and create really strong environmental outcomes, social outcomes, economic outcomes for their countries. And in a lot of case, there's been a bunch of emission reductions achieved through different sort of sovereign programs through multilateral bank programs that are kind of sitting on the sidelines and ready to go. And so we do believe that and are already seeing an uptick in this interest. We're not able to say who we are working with right now, cause we're just kinda not there yet, but I really look forward to that day. I think it's really, it really fits with both the spirit of the times, the zeitgeists and how community feels about the imperative of beating climate change. And we're also really lucky that we've got our platform here, ready to go product of four years of hard work at that time when countries are now ready to go. So we are fingers crossed and up only.
I guess the other question, and sort of the flip side to that is obviously private sector involvement, right? Do you see private sector, especially those which are actually working on this common projects, lobbying their governments to get involved in this?
Joseph Pallant [00:30:03]:
That is a great idea. Yes, and I do because fundamentally some of the article 6.2 credits will be created directly by sovereign governments, making investments within their own peer purview. And others will be projects on the ground, non-governmental commercial organizations getting and keeping carbon out of the atmosphere that want to pass this through the article 6.2 lens. And I think it remains to be determined if all of that's going to have to go article 6.4, but I do believe that, you know, because most action is still fundamentally local, that there will be specific projects that have private interests that will want governments to utilize article 6.2 pathway to issue this. And so I think in those cases, there has sort of be revenue split type of things. We already have that in British Columbia around our forest based projects where 92% of British Columbia is crown owned, is out asserted ownership by the government. So on those cases where we want to do a project and often where indigenous communities want to do a project to manage their landscape more in line with their vision and priorities, they're able to seek an atmospheric benefit sharing agreement with the province that lays their responsibilities of both parties in terms of forest management. And then it also lays out a split of the revenue. And so the crown will take resource rents in the form of a percentage of those offsets or percentage of that revenue for allowing these projects to happen on their land often and usually by people whose land it traditionally has been. But there is able to be a marriage of these sort of traditional system, the existing default colonial system, and able to come out to a good result, and to put a lot of power back in the hands of the people on the landscape which is totally what we're about. And so, yes, I believe that there will be sort of bottom up pressure from this space for governments as this evolves.
That's great. I think that will also accelerate the process of people getting onto the platform. You talk about a very interesting concept just now, which is like, by putting all of this on the blockchain, and it sort of living on blockchain, it's going to open up the market for this BITMO, right? There's going to be people like Klima DAO or even, just in general, just, you know, environment conscious people or investors who want to maybe purchase some of this BITMOs. Perhaps talk to us about that. Are we, crypto investors going to be able to do, you know, sort of buy BITMOs from the market? Do you see something like that happen? Is that sort of, part of the rulebook today for something like that?
Joseph Pallant [00:32:35]:
It's a great question. And we had always considered that these would first be sort of sovereign to sovereign tools and then they would go maybe sovereign and then emitters, large emitters in countries would be allowed by their governments to purchase a portion of their compliance demand from, from the ITMO market. And what's been really interesting and sort of thrown our thinking into delightful disarray with the landing of Klima DAO, is that, wow, they're actually maybe a really strong market and not only, you know, individual players or people trying to take speculative positions, but actual, real flywheels, carbon black holes that want to onboard this carbon to support its underlying projects and then get it out of the market so that this much more has to be achieved in order to meet the compliance demand. And so sort of having a lever of sorts to derive the system to work more and to get more carbon out of the atmosphere. And I think it's a combination of the jury is still out and we have more research to do and, and sort of checking in with people around how they feel about the open market fitness of article 6.2. I think some people feel that it's really not supposed to be part of the open market. It's really just supposed to be a sovereign tool. But in that process, I think if sovereigns want to allow these credits for sale into the market, I don't see why they shouldn't drive that. And so, yeah, I think that that book is still to be written to a certain extent, but gosh, like, I don't know who in good faith could say: "we don't want to have more demand for emission reduction outcomes. We don't want to provide to allow people to provide capital for real proven government sanctioned, emission reduction outcomes to happen all around the world." You know, that's why so many people in the carbon market are here have been working so long on this is because we believe that connecting that capital to those opportunities is how we take a big, a big bite out of crime, how we take a big bite out of the climate issue, and organize humanity. Use the tools, use the underpinnings, use the human condition in a way to, to solve this problem that we've gotten ourselves into on those same underpinnings.
Yeah. I think Klima has sort of thrown a bit of a curve ball to everybody, right? Which is to say, wow, there's suddenly demand to actually lock up carbon credits and people were willing to put money towards that and pay for it. And you could sort of generate some sort of economic flywheel from there. So, so I think it's interesting. I do think that, you know, maybe it will start with sovereign to sovereign and typically those conversations and those transactions I can imagine are very complex. But eventually if it turns out to be more of an open market sort of situation, certain things can become standardized. I mean, BITMOs are standardized, right? So, so there's, there's no reason why you can be traded sort of quite, quite, you saw simplify down the whole transaction.
Joseph Pallant [00:35:25]:
Let's do another podcast, if and when get our first sort of private transactions through the system because I do think it will be sooner rather than later. I, I definitely have an ancient Greek mathematician breathing down my neck to get him the first BITMOs. So I think everybody benefits. I think the whole system benefits by having that other source of capital and kind of forcing the issue and it can be a little bit uncomfortable. Even myself spending lots of time in the blockchain space as the blockchain space, kind of, understands its power, flexes, its power changes the world as we know it. And that can be uncomfortable for people who are feeling that flex, we're feeling that change. But you know, if I can say anything to my climate colleagues, we've been the disruptors. We've been the people creating this brand new system kind of out of nothing over the last 20, 25 years. And the exact same stuff that I hear people saying about blockchain, people were and still do say about us and the carbon market and then carbon offsets. And so that's, what's made this such a comfortable jump over for myself. And I think that we're already seeing really nice, in some quarters, really nice engagement and, and welcoming of this disruption that blockchain and Klima and, and other folks that are working in this space that the work that Toucan is doing to tokenize these to really seamlessly pull the retired have an offset retired and then pull them to the system as a new kind of entity as a new type of asset. So yeah, I think it'll it'll have bumps along the way, but I see such a energetic tie between the two and that the blockchain is a way to provide a lot of what we've been missing in the traditional carbon market space, capital organization, speed market, and a new little puff of air. So it's all really exciting.
Yeah. I think we can definitely do another episode once the first bit more transactions are done right? And I'm sure Archimedes will be very happy come on board as well, and we can have a chat about what happens and what goes on from there. I know the platform just went live recently. And you did mention COP26 in Glasgow. What's the next steps for the project and for the platform? You talk about having the rule book now and, you know, we should see BITMOs being issued and transacted soon but I guess, from your perspective what's the immediate next steps and what's the longer plan?
Joseph Pallant [00:37:39]:
Yeah. Thank you. So I'll all hands on deck. And now that we're live, we are working on getting national governments on board. And so I think there's going to be a little bit of a lull over Christmas, holidays sort of holiday season for folks and then really going to hit the ground running in the new year on that. And so we need to find users. That's going to be major piece of the puzzle and organizing ourselves to do that well, organizing the documentation so we've got everything there. And then also building a peer club where countries can help their colleagues sort of along in this thinking. We're also hoping that we may have some sort of channel partnerships through two nations and national governments in regards to their registries and their existing ways that they do their accounting, et cetera, et cetera. And so hopefully. Some sort of multi-lateral connectivity there that will have a, have a bump, which we really hope we can bring to pass. And then there's just also organizational development. And so we've sort of had a fairly small core team. We do have an aspect of funding we're organized as a not-for-profit cause we've seen ourselves as really the best way to engage all the governments of the world is hopefully both as, you know, as a non-profit in this regard both in terms of that engagement and then also in terms of having a business model or an organizational model that is really focused on what's needed by the system and what's needed by the economic drivers of this. So we really hope we can make that work out. We are connected with Ecotrust Canada, which is a Canadian charity. And so if you're in Canada, you can donate directly there to make that happen. So we're excited about building out our team a bit more. Doing some hires that we sort of had on the back burner, cause we've been really busy. And then also looking to what's the right way to grow the team, to be able to bring that ground game and organization to drastically increased level of interest, both in crypto and in climate the need to interact with real humans around the world. And, and really the need to sprint, right? Like that really dawns to us that, that we really need to go into sprint mode on this because now's the time, and we have an amazing tool to make this happen. I think it's designed very well for the systems in play and as moldable to, to do what fits. So we're really hopeful to be successful there. So I think that that's a big part of, of these next steps and really meeting that moment and having an organization that's spooled up and tooled up to do that.
Cool. I think you have a lot of work ahead of you, but I I'm sure it's, it's very exciting. We're near the end the session, I just wanted to, to sort of close off. We have some other questions, so we spoke a lot about, you know, the bit more platform, but, you know, I wonder if there was other things that the foundation was also working on that you want to mention, or is that something that we haven't talked about that you would like to bring up as well.
Joseph Pallant [00:40:17]:
Yeah, as per noted previously, we've tried to be really focused on, on what we're doing. I would say the spot where we have added some additional focus and will continue to do so is around this discussion of the climate impact of blockchain and proof of work blockchains do have a real climate impact. We also know that the merge is coming and that Ethereum will be moving to proof of stake and that will bring its emissions down to near zero. I think it's a really important time for blockchains that have kind of made their sole case as being environmental champions that they've got, you know, maybe 6, 9, 12 months to really leverage on that. You know, and to grow beyond that because of Ethereum will be switching and having really low carbon. But it does have a strong carbon footprint right now. And I think how we engage with this, this spring, was really recognizing that just like anything in climate action, you want to quantify your impact, reduce where possible offset the rest. And so really neat work around quantification is happening carbon.fyi from the folks that Offsetra did brilliant work this spring that continues today where you can put in your Ethereum wallet address, and they'll tell you your carbon footprint, and then you can go off set with them or some other fashion. And so I think that that quantification is there that reduction, I think of people moving proof of stake is reduction. There's a variety of different ways. And then offsetting the rest is really important. And I think that that's important now through the merge. I think it's also important to look at historical emissions. We are still involved in that discussion. There's a really brilliant group of people around the blockchain infrastructure, carbon offset working group that came together for this to try to build the tooling and the ecosystem to enable a wrapped green Bitcoin where you can provably pair or wrap emission reduction outcomes with the Bitcoin to sort of sell once and for all that argument of, well, you know, is this Bitcoin boiling the ocean or is it really no problem cause it was minted in a volcano? We wanna add another tool to this where that carbon neutrality travel around and be established for that token. So we're tryna nurture this ecosystem of people providing solutions in the sense and are always keen to talk with folks about the aspect of stuff, because it's a very important evolution. And I do know that crypto can play such a huge role. Web3 can play such a huge role in organizing humanity to beat climate change. Part of that is dealing with our footprint, making it better, but it's all eminently doable and it's very exciting. So I would class our other activities in that space and then, you know, supporting other groups that we think are really doing amazing work to understand this better to help bring people on board and to help everybody get this work moving.
Thanks so much, Joseph. I think it's really exciting. I think like you coined it earlier. It's sort of like a refi autumn, right? Suddenly all the conversation around climate change, around how crypto and blockchain can support the climate change initiatives that we're seeing have sort of all emerged the last couple of months. We're, we're seeing also new projects, spin out, I mean, Klima DAO is probably the most prominent, the Toucan protocol guys as well. But really, I think we're seeing a lot of this pop-up now, once people get more awareness and start to get creative about where they think they can help or where they think they can fit in. I think that's, that's all the time that we have today. Thank you so much, Joseph, for spending time with us. I just want to mention again, Joseph is the founder of the Blockchain for Climate Foundation. As he mentioned earlier, you can donate if you want through Ecotrust Canada. I think you're also applying for the Gitcoin grant. So I think good luck with that. I think whoever can provide support in that area, please do. I think it's, it's a very noble cause. And especially when there's a specific area for climate change projects. Now, that's all the time that we have today. Thank you very much Joseph. Thanks for joining us.
Joseph Pallant [00:43:53]:
It's an absolute pleasure Zhong and thank you to you and your team and all the work that folks do at CoinGecko to keep people up to date on exactly what's going on. Really appreciate it.
Bobby Ong [00:44:02]:
All right. That wraps up the show. Thank you for listening to the CoinGecko podcast. If you like our show and want to know more, check out podcast.coingecko.com or please leave us a review on iTunes. If you have any feedback, do drop us an email at firstname.lastname@example.org. Join us for more next week. See ya!
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