Digital solutions to scale high integrity carbon markets: Final outputs of Open Collaboration released
Since 2022 Gold Standard has been working in an Open Collaboration with the IOTA Foundation, ClimateCHECK and others aimed at using digital transformation to increase the speed and reduce the complexity of the carbon market. The final outputs of this collaboration have today been published.
Digital transformation is necessary to achieve the increases in speed and reduction in complexity the carbon market needs. This can only be achieved by actors from across the carbon market working together. Gold Standard, IOTA Foundation and ClimateCHECK joined forces in an Open Collaboration supported by Google.org aimed at improving data quality, efficiency and traceability across the carbon market value chain. In August 2022 they launched three working groups consisting of a broad range of stakeholders including market participants, technical experts and sustainability leaders to address these challenges and develop outputs for the public good.
The three groups were:
- A ‘Digital Monitoring, Reporting and Verification (DMRV)’ working group led by ClimateCHECK which aimed to inform how to upgrade and digitise monitoring approaches and quantification methodologies as well as the supporting verification processes and systems.
- A ‘Digital Infrastructure and Open APIs’ working group led by the IOTA Foundation which aimed to define core principles for the digital market infrastructure and how organisations and technologies can interact with it.
- A ‘Digital Assets for Climate Impact’ working group led by Gold Standard which aimed to establish best practice principles to leverage the advantages of distributed ledger technologies in the demand side of the carbon market, while applying safeguards to avoid perverse incentives, double counting or other risks.
The outputs of these groups are now available and open source to allow organisations from across the carbon market to build upon the work carried out so far.
‘Digital Monitoring, Reporting and Verification (DMRV)’
This report offers an analysis of Digital Readiness Assessments for projects focused on mitigating or adapting to greenhouse gas (GHG). It details the findings from 14 submissions across eight different markets, examining their readiness for adopting digital solutions in GHG projects. The report delves into four key areas: assessing the readiness for digitizing GHG methodologies, evaluating the suitability and effectiveness of digital tools for Monitoring, Reporting, and Verification (MRV), exploring the environmental footprint of these digital MRV solutions, and determining the specific digital requirements needed in GHG methodologies.
This overview aims to guide policymakers, project developers, and stakeholders, highlighting strengths, weaknesses, and areas for improvement in digital readiness, and ultimately aiding in effective climate action.
This report details the digital monitoring, reporting, and verification (MRV) pilot projects within Chile's Reciclo Organicos program, specifically focusing on blockchain technology for the Copiulemu landfill gas project and the Molina biodigester project. The pilots aimed to evaluate the feasibility and effectiveness of digital technologies in enhancing or replacing traditional MRV services in waste management projects. Key outcomes include the successful deployment of Digital MRV software, capacity building among participants, involvement of Dell Technologies, and the creation of a guide for future Digital MRV pilots.
The report finds that Digital MRV can be more effective than conventional MRV in terms of credibility and reporting time, with economic efficiency dependent on the scale of implementation. With increasing demand for MRV services in carbon markets, Digital MRV offers cost savings and improved efficiency, particularly when replicated across multiple projects. The positive outlook for Digital MRV solutions suggests growing adoption and development in this field.
‘Digital Infrastructure and Open APIs’
This report summarises a year-long endeavour to modernise and streamline the digital infrastructure within climate markets, with a focus on carbon credit markets. Tackling key issues such as antiquated manual processes and inefficiencies in methodology certification, the report advocates for the integration of Digtal MRV solutions them with carbon registries via open infrastructure and APIs. Highlighting the importance of collaboration and open development, the report offers practical recommendations and architectural guidelines to foster a more efficient, transparent, and scalable climate market ecosystem. The report encourages engagement from stakeholders involved in DMRV methodology and climate market infrastructure, aiming to advance a digitally-enabled carbon credit market.
‘Digital Assets for Climate Impact”
This report assesses the potential of blockchain technology in the carbon market, balancing its transformative possibilities against its potential risks. The report, based on extensive consultation within the Working Group on Digital Assets for Climate Impact and across the market, highlights four areas where the use of blockchain could enable a step-change from current market practices, including for project pre-financing, information management and innovations in carbon credit transactions. It also identifies five essential safeguards to avoid environmental, reputational and other risks, while emphasizing the need for ongoing research and open collaboration to fully realize the full potential of digital assets in the evolving carbon market.
These documents are published on behalf of the Open Collaboration, and not by Gold Standard in its own capacity as a standard-setting body.
During the course of the Open Collaboration the work that was being carried out by the IOTA foundation has transitioned to Demia. For more information about their work visit www.demia.net.
About IOTA Foundation
The IOTA Foundation (www.iota.org) is a global non-profit foundation that develops next-generation decentralized technologies for a new digital economy in a connected world. It redesigns the way people and devices connect to share information and value, removing middlemen. The Foundation collaborates with a global ecosystem and partners to research and develop technologies that deliver sustainable, real-world impact. Together, they are shaping a new digital economy, removing unnecessary friction and unlocking human potential. At the heart of the Foundation's mission is the Tangle, its open, feeless and highly scalable distributed ledger. Designed to support frictionless value and data transfer, the Tangle is a DLT infrastructure for Web3 applications and digital economies. Unlike blockchain alternatives, the Tangle allows transactions to be added in parallel; it also boasts low resource requirements, as well as zero-fee and fast transactions with finality within seconds. The IOTA token is the native currency on the IOTA network. It is used to transfer value and data and enable feeless micro-payments.
ClimateCHECK (www.climate-check.com, @climatecheck) was launched in 2007 to advance the state of the art for measurement, reporting and verification (MRV) and has since delivered innovative solutions for climate change and sustainability to over 400 organizations in over 50 countries. ClimateCHECK’s track record involves co-founding leading organizations including the GHG Management Institute, Xpansiv, and the Climate Chain Coalition. ClimateCHECK and IOTA co-developed the innovative Digital MRV solution to generate trusted data-driven value for climate change and sustainability stakeholders.