Ever heard of carbon offsets being discussed in the IPCC? Ever nodded along at how important this was to keep temperatures down but scratched your head in private without a clue as to what these terms mean?
Fret not!
We, at Atlantis, are going to arm you with all the essential terminological weaponry, jargon ammo and in-depth know-how that'll help you separate science from fiction with all you need in your armory to earn those climate bounties.
Let's start off with carbon offsetting. Carbon offsetting basically means a cut or compensation in carbon or greenhouse gas (GHG) emission by an individual or an organization. This compensation is done by investing in schemes or climate-friendly projects like tree plantation drives or renewable energy enterprises, just to name a few.
In case the nerd in you wants a better definition, this is what the Cambridge Dictionary defines carbon offsetting as "an action or activity (such as the planting of trees or carbon sequestration) that compensates for the emission of carbon dioxide or other greenhouse gases to the atmosphere."
Why do we need to offset CO2?
Now imagine all the firms, persons, processes, and things that emit CO2 or some form of GHG. Our World in Data came up with this interesting infographic in 2016:
So it's safe to say that the bulk of the GHG emissions was used for energy use by the transport sector, industries, and buildings. For these emitters, stopping industrial or commercial use of carbon is not an option. And this is where carbon offsetting comes in.
Thanks to carbon offsetting schemes and programmes, they can continue to emit these substances as long as they continue to invest in offsetting strategies.
A Trip Back in Time
The word 'offset' finds its roots in the U. S. Clean Air Act, which dates back to the 1970s. According to the Encyclopaedia Britannica (yeah, we actually read that), "The use of the term offset to refer to emissions compensated for by decreases at another facility and has been used since the late 1970s as part of the U.S. Clean Air Act, in which new emissions in high-pollution areas were allowed only where other reductions occurred to offset the increases. In addition, the popularization of the term carbon offset in the first decade of the 21st century accompanied growing concern about CO2 as an atmospheric pollutant."
To understand the history of carbon offsetting, one needs to travel back in time to the 1990s, when the Kyoto Protocol came into effect. Under the international commitment, the states, aka "parties", are bound together via the multilateral international treaty to cut down on GHG emissions.
Elaborating on the Kyoto Protocol, the UNFCC states, "In short, the Kyoto Protocol operationalizes the United Nations Framework Convention on Climate Change by committing industrialized countries and economies in transition to limit and reduce greenhouse gasses (GHG) emissions in accordance with agreed individual targets."
In simpler terms, the Kyoto Protocol was an international treaty that spoke about the need to cut down on GHG emissions. The protocol rests on the principle of "common but differentiated responsibility", a concept of international environmental law widely used in climate change policy making. When it comes to the Kyoto Protocol and limiting GHG emissions, this common but differentiated responsibility acknowledges that states, or member countries, have a responsibility to curb emissions. However, a "one size fits all" approach can't be followed.
Basically, the rules cannot universally apply to all countries. So the best way to go about this is to strike the right kind of balance between emissions and reductions. Enter the carbon credit!
The Carbon Credit
At the core of carbon offsetting is another term that has been doing the rounds a lot lately - the carbon credit.
"The key concept is that offset credits are used to convey a net climate benefit from one entity to another," says offsetguide.org.
Let's delve deeper into what the carbon credit mechanism entails with a hypothetical.
Take person A - Ramesh - (and might we add, any resemblance to a person, animal or thing, are purely co-incidental) who drives a fossil-fuel guzzling and emission-intensive car.
One day, Ramesh decides he wants to cut down on his carbon footprint but can't give up his car. In this instance, Ramesh can buy carbon credits which are like a permit allowing him to continue driving his car and emit CO2.
Basically, the carbon credit system follows the age-old legal notion of the Polluter Pays Principle. The carbon price for these credits entails the actor, in this case, Ramesh, paying a price for the pollution caused by driving his car.
Carbon credits are basically certificates that allow you to continue emitting carbon and other GHGs. According to Investopedia, "One credit permits the emission of one ton of carbon dioxide or the equivalent in other greenhouse gases."
And so, carbon credits and carbon prices have led to a whole new market where the financial experts geek out on carbon trading, where CO2 and other GHG pollutants are traded as commodities.
So now that you have a rough idea about terms like offsetting and carbon credits, let's connect that to what we at Atlantis are working on.
At Atlantis, we try to promote a culture of 'decentralized offsetting', and we do this by giving you the power and control. And by this, we mean you can take actionable steps and earn climate bounties along the way. Like we're talking about this:
As opposed to this:
We've created the Atlantis Network Protocol (ANP), which is built around one core principle of delivering "proof of impact".
Intrigued? Hear us out.
To understand decentralized offsetting better, let's break down what the current centralized market looks like. For this, we need to understand two terms - centralized market and offsetting transactions.
What is a centralized market?
According to Investopedia, a centralized market is a "financial market structure that consists of having all orders routed to one central exchange with no other competing market."
In other words, the power belongs to one primary market entity that is a primary point of contact for all trading activity, a marketplace of sorts.
An example of this abroad would be the New York Stock Exchange. Closer home, we have the National Stock Exchange.
So what the hell is an offsetting transaction in a centralized market?
We have some idea of carbon offsets at this point.
Similarly, an offsetting transaction involves two entities. Let's play a game using a hypothetical with two friends. Let's call them - Archie and Betty(again, any resemblance to a person, animal or thing, are purely co-incidental).
Archie and Betty are planning a surprise birthday party for their friend. Betty wants to buy an ice cream cake for the party.
That's sweet, right? Except that it's scorching summer, and Betty would have to travel 10km to her friend's place carrying an ice cream cake in peak traffic.
Choose an option from the following as to why Archie thinks this is a bad idea.
- Betty is an idiot and has terrible taste
- The ice cream cake will melt
- Archie wasn't invited to the party
Since we all know the right answer, we can clearly see that Archie and Betty have opposite views on the cake situation.
Therefore (yes, 'therefore' because we're making a point here), if Archie engages in an activity that is the polar opposite of Betty, then Archie is neutralizing Betty's position and Archie's stance can be termed as an offset.
Just to be clear, let's look at the dictionary definition: "An offset involves assuming an opposite position in relation to an original opening position…"
A new culture of Decentralization
With tech-enabled transactions, the market is transitioning to a more decentralized model, particularly with crypto at play. Decentralized markets essentially connect traders and buyers directly.
This is where Atlantis comes in.
Remember that infographic that said industries were the biggest emitters of CO2 and GHG?
Organizations are constantly looking for ways to reduce their emissions by investing in carbon offset schemes. Through our ANP, you, as a "citizen of Atlantis", get to collaborate with such organizations targeting to cut down or offset their energy footprint. And you get to do this by raking in those climate bounties while you're at it!
If that doesn't sound badass enough, as a climate bounty hunter, you will be part of a new movement, ushering in the culture of decentralizing offsetting.
By decentralizing the offsetting process, you function as a change agent. You have the power to contribute to the offsetting process.
As we said, the power rests with you. So, what are you going to do about it?
