Pure CO2e Credit Segregation with Blockchain Attribute Tokens
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Solution Overview
Problem
Current carbon credit systems are non-fungible, difficult to access, and lack environmental credibility, preventing the creation of a standardized price for carbon emissions due to the mix of attributes embedded in each credit, which hinders the transition to a low carbon economy.
Innovation Solution
A method using distributed ledger technology to segregate and tokenize pure CO2 equivalent from existing carbon credits, ensuring environmental credibility and creating a market-determined price through a decentralized audit process, with QR codes for verification.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If carbon credits are created with multiple attributes (environmental, social, economic) to represent real-world carbon reduction projects, then the credits reflect actual environmental impact and credibility, but the credits become non-fungible and difficult to standardize for pricing and trading
Solution Approach 1:
The patent segments carbon credits into distinct components: a core fungible CO2e unit representing pure carbon equivalent, and separate non-fungible attributes (environmental, social, economic) that are tokenized as additional tokens. This segmentation allows the core carbon value to be standardized and traded freely while preserving specialized attributes as optional add-ons, resolving the contradiction between fungibility and environmental credibility.
Solution Approach 2:
The patent extracts the pure CO2e value from the complex bundle of attributes embedded in traditional carbon credits. By separating the core carbon equivalent function from the project-specific attributes, the invention creates a standardized, fungible carbon unit that can be freely traded and priced, while the extracted attributes remain as separate verifiable tokens.
2Adaptability or versatility
If carbon credits are standardized to one ton of CO2 or CO2 equivalent to enable fungibility and pricing, then a unified market price can be established, but the nuanced environmental, social and economic attributes of different projects are lost
Solution Approach 1:
The patent implements a nested token structure where the core CO2e token contains or references additional attribute tokens. The fungible carbon unit is nested within a broader system that can incorporate project-specific environmental, social, and economic attributes as nested layers, allowing standardized trading at the core level while preserving detailed project information when needed.
Solution Approach 2:
The patent introduces attribute tokens as intermediary elements that bridge the gap between standardized carbon units and project-specific characteristics. These intermediary tokens carry the nuanced project attributes while remaining linked to the core fungible CO2e token, enabling both standardized pricing and preservation of project-specific information.
3Reliability
If distributed ledger technology is used to tokenize and segregate carbon credit attributes, then environmental credibility and transparency are improved, but the system complexity increases
Solution Approach 1:
The patent segments the carbon credit system into distinct token types on the distributed ledger: core CO2e tokens for fungible carbon representation, attribute tokens for environmental/social/economic characteristics, and audit tokens for verification. This segmentation simplifies the overall system architecture by giving each component a clear, dedicated function while maintaining high reliability through transparent blockchain recording.
4Reliability
If a decentralized audit process is implemented to verify carbon credit attributes, then environmental credibility is guaranteed, but the process requires additional resources and time
Solution Approach 1:
The patent implements preliminary verification and certification of carbon project attributes before they are tokenized and recorded on the distributed ledger. By completing the audit and verification process in advance, the system ensures environmental credibility is established beforehand, eliminating the need for time-consuming ongoing audits while maintaining guaranteed credibility through the immutable ledger record.
Data Source
AI summary
A process for segregating attributes of carbon credits including extracting pure CO2 equivalent from existing carbon credits, tokenizing the extracted pure CO2 equivalent and recording the tokenized pure CO2 equivalent on a distributed ledger. The process includes generating a quality certification mark with an embedded QR code when the tokenized pure CO2 equivalent is used for voluntary offsetting. The embedded QR code provides a link to the distributed ledger for independent verification of offsetting claims. The process includes segregating additional attributes from the existing carbon credits, wherein the additional attributes represent social or environmental benefits associated with carbon projects. The process includes tokenizing the segregated additional attributes and recording the tokenized additional attributes on the distributed ledger or a separate distributed ledger. The distributed ledger is a blockchain wherein the tokenized pure CO2 equivalent is represented as a smart contract on the blockchain.