Summary

Deploy capital to fund carbon project development and secure the forward delivery of EEIMP pool compatible credits.

Motivation

Background
Pursuant to KlimaDAO’s mission of rapidly scaling up the deployment of capital toward high-impact sustainability projects, in September, 2022 we proposed the utilization of a set amount of treasury funds toward financing the development of new carbon projects. This effort strongly aligns with the coalition-building necessary to accelerate the on-chain carbon ecosystem’s development and showcase the collaborative potential of the ReFi space.

EEIMP Pool Bootstrapping
C3’s Energy Efficiency and Impact carbon pool design is centered on carbon projects with strong social co-benefits, including small-scale community led energy efficiency projects. The pool is thus designed to impact various Sustainable Development Goals (SDGs), including:
-SDG 3: Good Health and Well-Being
-SDG 6: Clean Water and Sanitation
-SDG 7: Affordable and Clean Energy
-SDG 11: Sustainable Cities and Communities
-SDG 13: Climate Action

The types of projects which would qualify for the EEIMP pool include clean cookstoves, clean drinking water, and small biogas plants. Currently, the digital carbon landscape lacks strong representation from these types of projects. Supporting the EEIMP pool’s development is therefore a direct means at increasing the overall diversity of carbon project types on-chain.

Project Support: Improved Cookstoves for Rohingya Refugees in Bangladesh

Project Context
The Improved Cookstoves project in Bangladesh is a small yet significant step to address the fact that globally, more than three billion people use inefficient stoves or polluting open flames to cook their meals, which harms their health as well as the climate and the environment, according to the Clean Cooking Alliance a non-profit focused on the issue. In Bangladesh, Rohingya Refugees live in cramped conditions with limited access to income generating activity or to sources of fuel to boil water and cook food.

The energy-efficient, improved smokeless cookstoves known locally as ‘Chula’ are a massive improvement on the current reliance on traditional stoves or open wood fires, which damage respiratory health exacerbated by the confined space of the dwellings made of tarpaulin. The improved smokeless cookstoves burn wood more efficiently, causing less environmental impact from the extensive wood harvesting for cooking fuel in the forest area surrounding the camps.

StarCB’s full RFC post is available here: https://forum.klimadao.finance/d/131-rfc-eeimp-compatible-project-opportunity-starcb-x-klimadao

Importantly, this opportunity is a direct project financing initiative and thus KlimaDAO can market its participation as such.

Credit Issuance & Costs
Units are priced at $8/tonne

2023: 15,625
2024: 15,000
2025: 625

Total offsets: 31,250 tonnes
Total cost: $250,000 (250,000 USDC)

Risk Mitigation
SCB mitigates the risk of non-delivery by conducting in depth due diligence on the feasibility and technical parameters of the project. SCB conducts a detailed review of the project developer with whom it is partnering in the project implementation. For this particular project it is VNV, a seasoned project developer with many years of experience. VNV's teams have already completed more than 26 high impact projects which are registered with The Gold Standard, the credits of which have been retired by reputable organizations known for their strict DD standards on the quality of the credits they use, namely PwC, McKinsey or Laudes Foundation etc.

Additionally, KlimaDAO has ensured the following parameters are included in a prepared Verified Emissions Reduction Purchase Agreement (VERPA):
-Should a delivery failure occur from this project, StarCB will provide ‘like’ credits from a similar project in terms of vintage, region, certification standard and technology type/methodology.
-Should bridging not be possible at the time of credit delivery, KlimaDAO holds the right to sell the credits at no charge by StarCB to another entity. Any gain from such an action will be sent to the DAO wallet. These potential future transactions will be facilitated via StarCB’s registry account.

Polling Period

The polling process begins now and will end at 12:00 UTC on January 20, 2023. Assuming the forum proposal is approved, it will advance to Snapshot.

Enter into forward delivery agreement with StarCB for 31,250 tonnes delivered from 2023-2025 at $8/tonne.

This poll has ended.

New high impact credits sounds awesome and fact that they are under GS is absolutely perfect!

Is the polling period a little short at this time?

What is reasonings for 250k weight, why not more or less? How much we would have USDC left after this? Is this part of 1.5m funding like mentioned in KIP-30?

Is there plan what we are doing with the issued credits once we get them? I'm assuming that plan is to use C3 for bridging these new credits on-chain. Do we pool them on the sushi paired with klima token maby or are we going to use it directly to back klima token?

Can we get more of these tokens to our treasure later by offering bonds?

Is there plan to grow back the invested USDC so we can do smiliar investments/ research/ development/ case studies? Maby by opening small patch of bonds to get USDC into treasure in exchange for Klima tokens (maby the unburned fee tokens if KIP-31 passes?)?

Is there possibility to gain any governance rights with the deal? Like C3 tokens paid as a reward for bridging the credits if we decide to be the ones who bridges them? Should there be deal that klima offers to buy rest of the credits via bond program and those credits are promised to be bridged to polygon?

I got so many questions but I think I would vote for this. Paying 250k for showing how bridging is done, having connections to GS trough awesome high impact project and supporting their valuable work on the ground plus getting those carbon credits is well worth it.

    Nikodemos Thank you for your questions - please find responses below:

    1) The 250k weight is the minimum ticket for direct financing of this carbon project.
    2) The plan is to bridge the credits on-chain to utilize for bootstrapping C3's EEIMP pool (KLIMA pairing).
    3) Yes, we can have a proposal at a later date to support EEIMP bonds.
    4) Depending on market conditions, we could certainly have a proposal to sell the credits at a profit. This can be discussed closer to their issuance date.
    5) KlimaDAO is currently entitled to 10% of C3 tokens issued through our strategic partnership.

    This is a vital piece of the puzzle in terms of scaling the Digital Carbon Market. I think backing of a cookstove project in particular sends a strong signal of how carbon credits can directly benefit people and planet. Ensuring alignment with Gold Standard criteria is also an excellent move. Although as with all forward-looking carbon projects this is an endevor without risk, StarCB are an ideal partner. I strongly support both this particular proposal and the direction of the DAO in terms of strategically entering the forward carbon space.

    6 days later

    If we look at our other price per tonne tokenised carbon assets (week 66), none of them is more than $2. If this is going to be priced at 8$ who is going to pay this much for them? I would guess price will also drop to sub 2$, so we would take a loss of 6$ per tonne. Or am I missing something ?

      CryptoKnight These would be applicable for a completely new pool - EEIMP. The pool launch would be modelled off of off-chain pricing averages for the vintages/methodologies suitable for it and therefore represent a completely new pricing structure to what exists across currently launched pools, such as BCT.

      11 days later

      I realise the vote has closed - but this is a really good step in realising the on chain voluntary market. Just one word of caution - it is great that these offset are GS, but i understand that cookstove projects are about to come under pressure for overstating their benefits (number of offsets), where from a GS point of view the new metered methodology (https://globalgoals.goldstandard.org/news-methodology-for-metered-measured-energy-cooking-devices/) is going to the one that will be achieve the most trust, impact and value. I assume this project isn't using methodology - so be prepared to defend the position..

      2 months later
      Write a Reply...