• Proposals
  • KIP-34: Aither ARBO-eligible Carbon Project Opportunity

Summary

Deploy capital to fund carbon project development and secure the forward delivery of nature-based removal credits compatible with C3’s ARBO pool specification.

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 drives the coalition-building necessary to accelerate the digital carbon ecosystem’s development, showcasing the collaborative potential of the ReFi space.

ARBO Pool Bootstrapping
C3 currently curates two types of tokenized carbon pools: UBO and NBO. Both of these pools allow the deposit of removal-type credits, but their current curation makes them far more attractive to specific price-classes of credits, and thus technologies (primarily mitigation-type credits). The UBO pool is ideal for renewables and energy efficiency projects, whereas the NBO pool caters to nature-based solutions with a focus on emissions mitigation (e.g. forest protection, improved forest management, and REDD+).

As stated by C3, “In order to meet the needs of clients seeking to diversify their offsetting strategy to include additional emissions removal credits, we are proud to launch the criteria for our ARBO pool criteria (Afforestation and Restoration-based Offset)”.

This proposal directly supports climate action - in partnership with Aither and communities on the ground - as well as providing the KlimaDAO treasury with the necessary tonnage to bootstrap the new ARBO pool and unlock liquidity for an additional class of credits.

The ARBO pool will accept credits from leading registries, including Gold Standard and Verra, and support methodologies including:

  • GS Methodologies
    • SOIL ORGANIC CARBON FRAMEWORK METHODOLOGY
    • AFFORESTATION/REFORESTATION GHG EMISSIONS REDUCTION & SEQUESTRATION METHODOLOGY
  • Verra Methodologies
    • VM0021 Soil Carbon Quantification Methodology, v1.014
    • VM0026 Methodology for Sustainable Grassland Management (SGM), v1.114
    • VM0032 Methodology for the Adoption of Sustainable Grasslands through Adjustment of Fire and Grazing, v1.014
    • VM0021 Soil Carbon Quantification Methodology, v1.014
    • VM0026 Methodology for Sustainable Grassland Management (SGM), v1.114
    • VM0032 Methodology for the Adoption of Sustainable Grasslands through Adjustment of Fire and Grazing, v1.0
    • VM0024 Methodology for Coastal Wetland Creation, v1.014
    • VM0027 Methodology for Rewetting Drained Tropical Peatlands, v1.014
    • VM0033 Methodology for Tidal Wetland and Seagrass Restoration, v2.014
    • VM0036 Methodology for Rewetting Drained Temperate Peatlands v1.014
    • AR-ACM0003 (CDM) - This is the methodology of the project proposed here.
    • AR-AM0014 (CDM)
    • AR-AMS0003 (CDM)
    • AR-AMS0007 (CDM)

Project Support: Kwamisa/Other Reserves Community Forest Project

Project Context

The primary goal of the project activity is to cultivate teak plantations in the degraded forest reserves to improve the livelihood of the local communities and biodiversity, which will ultimately help to combat climate change by increasing the sequestration capacity of carbon dioxide and other greenhouse gasses. In addition, the project activity is also providing needed employment to the forest-fringed communities; supporting community-led natural resource management and regeneration to promote reforestation; improving Nutrition, food security and local livelihoods through sustainable use of forests and trees and related income generation.

The project activity is managed by the Private Afforestation Developers Organisation (PADO), an umbrella organization of private forest plantation developers in Ghana. They are the legal owners of the plantations located in Ghana; Kumasi at Kwamisa Forest Reserve located at Offinso Forest District within the Ashanti Region of Ghana. The reserve lies midway between Kumasi-Techiman and the Kumasi–Sunyani Road, about 35 miles north of Kumasi. The area is approximately bounded by the following coordinates: Latitudes between 7o 05' North and 7o 14' North Longitudes between 1o 50'West and 1o 57'West. PADO was incorporated in 2010 as per the Companies code, 1963 (Act 179) as an association and out of it, PADO Investment Limited was established and incorporated in 2016 as a subsidiary and a commercial business entity of PADO.

Project Details

Verra project page: https://registry.verra.org/app/projectDetail/VCS/3425

Methodology: AR-ACM0003

Aither’s full RFC post: https://forum.klimadao.finance/d/175-rfc-arbo-compatible-project-opportunity-aither-x-klimadaov

Credit Issuance & Costs
Units are priced at $15.90/tonne

2023: 10,798
2024: 3,478

Total credits: 14,276 tonnes
Total cost: approximately $227,000 (227,000 USDC)

Risk Mitigation
Aither’s history in the carbon market and current efforts to accelerate on-chain carbon adoption make our organization a natural ally to the work that KlimaDAO is undertaking. We believe KlimaDAO’s launch was a watershed moment for the VCM and are hopeful to collaborate with the DAO as we explore pathways to bring our carbon projects toward the digital frontier which is Web3.

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, Aither will provide ‘like’ credits from a similar project in terms of vintage, 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 Aither to another entity. Any gain from such an action will be sent to the DAO wallet. These potential future transactions will be facilitated via Aither’s registry account.

Polling Period

The polling process begins now and will end at 17:00 UTC on April 4th, 2023. Assuming the forum proposal is approved, it will advance to Snapshot.

Enter into forward delivery agreement with Aither for 14,276 ARBO-eligible tonnes delivered from 2023-2024 at $15.90/tonne?

This poll has ended.

This is why Klima went into conservation phase when markets were exuberant - right? Now the DAO has the scarce resources that can be put to work where they are impactful.

Impactful. Not a lending protocol or DeFi deposit. Impact.

Fully support. Lots of beneficial shapes to this 🫰

Enough said, THIS, is going to be another watershed moment, all for this proposal!

9EA5T we are actively working with Verra and other carbon registries within their digital carbon working groups to re-enable the digitization of carbon assets

Planting Teak.... What could possibly go wrong?!

Great to see impact projects that a lot of mainstream folks can identify with, and planet and people on the ground can actually benefit from long term.
It's easy to see carbon-offsetting as just another delay strategy from the fossil/big-ag industries (as are their tactics), and it's therefore easy, or rather convenient for some to tar Klima with the same brush.
This gives a great foundational narrative to Klima's ultimate goal - a livable, lovable for all her guests .
Wishing lots of success.

9EA5T this is one of the reasons there is a fallback clause in the agreement with Aither allowing them to liquidate the credits on KlimaDAO's behalf using their registry account and return the treasury's capital in-kind

This is obviously not the desired outcome - the goal of this proposal is to support on-the-ground climate action while increasing the diversity of credits available in the Digital Carbon Market - but should the traditional registries refuse to establish a reasonable policy for bridging, the treasury can still support this carbon project without risking that the resulting credits get "trapped" off-chain after delivery.

CryptoKnight as you can see on the Verra project page, this project is implementing methodology AR-ACM0003: Afforestation and reforestation of lands except wetlands

You can see all the details of this methodology, including the methodology specification document, here: https://cdm.unfccc.int/methodologies/DB/C9QS5G3CS8FW04MYYXDFOQDPXWM4OE

In particular section 6 of the methodology spec explains how monitoring is carried out (they reference some other documents which are available under "Tools referenced in this methodology" on the website linked above):

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