The crypto campaign known as Toucan that aimed to get rid of low-quality, useless carbon offsets is failing and, in fact, generating more of them.
The little-known platform has purchased over 25% of all carbon credits from the world’s largest offset verifier Verra.
The combination of blockchain technology and climate solutions, namely carbon offsets, offers transparency and accountability, as it allows to keep a public record of all such transactions and accounts involved in them.
Hence, with the prices for individual offsets becoming publicly known for the first time ever (while buyers remain anonymous), crypto could have bring some order to a rather chaotic market.
But the rapidly expanding market wiht a projected $190 billion in sales by the end of this decade also attracted crypto users with its promise of a lucrative, non-regulated trading environment.
Toucan was launched with the aim of purchasing all the cheapest, lowest-quality credits, thus preventing heavy carbon polluters like oil companies from purchasing meaningless offsets.
And once Toucan’s users would clean up all the cheap credits – a process they’ve nicknamed ‘sweeping the floor’ – such companies would have to purchase offsets from more meticulous projects.
However, what started off as a do-gooder mission appears to now be backfiring.
Many of the carbon credits purchased by Toucan’s users are from renewable energy projects that are over a decade old, meaning that they aren’t really helpful to the environment as such projects do not require additional funding to displace fossil fuels.
Furthermore, with credits that issued so long ago, when standards were significantly lower, they almost certainly wouldn’t be eligible for trading on established markets today.
Thus, instead of actually increasing the price and quality of carbon credits by buying out the alleged finite amount of ‘bad’ credits, the project has ended up doing the opposite by generating demand for such offsets and, therefore, stimulating their production.
Only in the last six months, the Toucan platform has seen the purchase of over 21 million credits verfiried by Verra.
The crypto platform is aware of the issue and is currently working on finding a way to filter out old credits.