Why don’t voluntary or compliance carbon offset markets work? The numbers simply don’t add up. A lack of connection between the certificates and the physical inventory means that both parties—the seller and buyer—take credit for a reduction in emissions. And this double counting (issuing two certificates for a single credit) leads to a surplus of certificates under which the associated markets crash and burn. The good news is, the blockchain will allow us to start over and do the math correctly, ensuring that a traded certificate represents a real reduction in emissions.
Ross and Christophe are joined by Aldyen Donnelly, the Director of Carbon Economics for Nori. She has enjoyed a 40-plus year career as a small business developer and consultant, with a focus on cost-effective methods of reducing pollutants. In 1996, Aldyen designed a non-profit consortium of Canada’s largest emitters, bringing those corporations together to reduce and remove emissions via a carbon offset market. By 2002, the Greenhouse Emissions Management Consortium (GEMCo) was the largest private sector buyer of carbon credits in the world.
Aldyen joins Ross and Christophe to discuss how GEMCo employed double-entry bookkeeping to trade in certificates that represented an actual reduction in inventory and why the voluntary and compliance markets that followed did not. Aldyen explains the fundamentals of cap and trade, the concept of ‘pump and dump,’ and the function of a derivatives market. She shares her experiences with landmark climate change work like the Kyoto treaty, COPT, and the Vancouver Stock Exchange. Listen in for Aldyen’s insight into how the transparency of blockchain technology can help farmers become more productive and profitable—with or without the benefit of carbon credit sales!
[2:18] Aldyen’s experience through the GEMCo
[3:40] The fundamentals of cap and trade
[5:44] Aldyen’s involvement with COPT and the Kyoto treaty
[9:18] How the principles of GEMCo differed from current markets
[15:30] The elements of a good market
[18:33] How the ‘additionality test’ limits innovation
[20:38] The difference between voluntary and compliance markets
[27:06] Aldyen’s role in the Vancouver Stock Exchange
[29:10] The concept of ‘pump and dump’
[34:07] How a derivatives market could be useful for Nori
[39:02] The benefits of blockchain technology for farmers
[44:42] Aldyen’s climate change solution
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