• General
  • RFC: blockchain native carbon tokens - Coorest x KlimaDAO

This RFC is in response to KlimaDAO releasing an ‘alternative standards framework to analyze novel carbon certification and offset issuance standards.

Motivation

Our Goals

It’s Coorest’s goal to expand into partner ecosystems like KlimaDAO with our blockchain-native carbon token to gain more adoption for these types of assets.

The text below provides an overview of our platform, answers to KlimaDAO’s Alternative standards framework, and serves as a starting point for KlimaDAO’s community to analyze a partnership together.

About Coorest
Coorest introduces a new carbon standard and a platform based on blockchain technology to cut out the middleman allows for easy and transparent access to carbon compensation.
The certified Coorest Carbon Standard focuses on newly planted trees (additionality) only and allows the onboarding of farmers and green projects globally enabling them to generate and monetize their carbon sequestration efforts. Besides onboarding green projects, Coorest has its own in-house tree planting operations in Spain. All projects are monitored via satellite data (dMRV) to warrant the continuity and transparency of carbon sequestration efforts.
The Coorest carbon ecosystem has the following tokens; NFTree, CO2 token ($CCO2) and Proof of Carbon Compensation certificate (NFT). Through the tokenization of trees, absorbed CO2 and the claim on carbon compensation, the problem of double counting of compensated carbon emissions is avoided. Via the Coorest dApp, individuals, companies, and institutions can easily compensate for their carbon footprint while having maximum transparency.

#Responses to KlimaDAO’s Alternative Standards Framework

How does your standard address the following concerns regarding carbon credit integrity?

Real: All emission reductions and removals—and the project activities that generate them—shall be proven to have genuinely taken place.

** How does your standard prove that emissions reductions and removals have taken place?**
Coorest uses MRV data for minting CO2 tokens. We have a monthly biomass datafeed via Chainlink DON directly integrated into the CO2 token minting functionality. We use biomass as an indicator for vegetation presence and growth backing up our CO2 absorption calculations. We are adding and integrating satellite CO2 absorption data to validate the CO2 token amount. Therefore, we have a 2-step verification in the CO2 token minting. Step1: check if the trees are present Step 2: check Co2 absorbed amount (this is currently under develoment)

** Does your standard involve verification via remote sensing technology and/or other digital means?**
Coorest uses biomass satellite data via our partner Floodlight Chainlink Oracle. Once a month the Coorest smart contract makes an oracle call to update all projects.
** Measureable: All emission reductions and removals shall be quantifiable, using recognized measurement tools (including adjustments for uncertainty and leakage), against a credible emissions baseline.**

** How is a project baseline determined with your standard?**
The baseline scenario in CCS consists of the current rate of sequestration; and the current amount of carbon that is stored in the existing vegetation. It is stated in the CCS document that “in the event project activities have started prior to calculating the baseline, the project needs to estimate the above-ground biomass using historical information about vegetation type and satellite imagery for estimating vegetation density”. Coorest has developed Coorest Sequestration Factor database (CSFD) for the calculation of baseline carbon sequestration. The database requires input of diameter at breast height, height of tree values.

** Should baseline determination be dependent on the methodology applied within your standard, please include those details here.**
All details rgarding baseline scenario can be found here: https://coorest.io/wp-content/uploads/2022/09/ESPL_-Coorest_Carbon_Standard__Methodology_Certification.pdf
** Permanent: Carbon credits shall represent permanent emission reductions and removals. Where projects carry a risk of reversibility, at minimum, adequate safeguards shall be in place to ensure that the risk is minimized and that, should any reversal occur, a mechanism is in place that guarantees the reductions or removals shall be replaced or compensated. The internationally accepted norm for permanence is 100 years.**

** How is permanence determined within your standard? How does this differ between supported methodologies within your standard?**
Permanence is determined by the minimum amount of that the trees will stay in place after being planted. However, trees are always exposed to external risk threathening the permanence. Therefore, we are developing a tree and carbon token insurance with Etherisc to insure the trees and CO2 tokens. Read more about the parametric insurance: https://coorest.io/first-on-chain-carbon-insurance/

** Does your standard adhere to the internationally accepted norm for permanence (100 years)?**
No, we have a minimum of 20 years at this moment.
** Additional: Project-based emission reductions and removals shall be additional to what would have occurred if the project had not been carried out.**

Does your standard adhere to the principle of additionality? If not, what measures do you have in place to ensure that finance generated from the sale of offsets under your standard are contributing to the fight against climate change?

Additionality has been a deeply focused principle in the Coorest Carbon Standard. The projects wishing to be registered in CCS have to demonstrate the additionality principle. This component is achieved via additional sequestration or emission reduction through implementation of project activities over and above what would have occurred in a baseline scenario and without the revenue generated by the sale of offsets. The eligible project activities under CCS are: • new tree planting, • improving soil characteristics, • enhancing biodiversity through agroforestry methods, • avoiding monoculture by positively affecting biodiversity, • and no intentional deforestation prior to planting new trees.
If adhering to the additionality principle, how is additionality determined under your standard?
CCS requires project owner to confirm on additional activities planned in the project area that would benefit the project, activities should not be mandatory in the project location, and no land use change or deforestation took place in the past. Coorest will analyze, on a case-by case basis and in accordance with the specific circumstances of every single project, whether each project complies or not with the additionality requirement.
Independently verified: All emission reductions and removals shall be verified to a reasonable level of assurance by an independent and qualified third-party. ○ How is third party verification undertaken by your standard?
The CCS has been audited by Earthood. All our tree planting projects are monitored by Floodlight satellite data and put on-chain via Chainlink DON. This data is required to mint CO2 tokens. Coorest itself can’t mint CO2 tokens.

** Assuming third party verification takes place by entities outside of your organization, how are such entities evaluated?**
Coorest is a data driven organisation, utiising near- real term satellite data to verify emission removals
** Please include additional information related to the verification of emissions reductions and removals under your standard which you see as advantageous to the integrity and climate impact of your projects.**
https://coorest.gitbook.io/ccs-registry/
** Unique: No more than one carbon credit can be associated with a single emission reduction or removal as one (1) metric ton of carbon dioxide equivalent (CO2e). ○ Do you adhere to the uniqueness principle?**
Yes. Our projects are not issuing offsets under another standard or project development activity.
** Does your standard support the issuance of carbon credits in units greater or less than 1 metric ton (CO2e)?**
The Coorest CO2 tokens ($CCO2) equals 1 kilogram of absorbed CO2

** Does your standard support the fractionalization of carbon credits after their initial issuance?**
Yes

Ex-post vs. Ex-ante

Currently, forward carbon credits issued under Gold Standard’s forestry projects (Planned Emission Reductions), ex-ante Plan Vivo Certificates and Temporary or Long-term CER (t/l-CER) are not considered valid for making environmental claims because they do not meet ICROA requirements on verification and permanence.
KlimaDAO holds the view that any credits utilized for offsetting claims should be ex-post; ergo, no ex-ante credits can be utilized in our Retirement Aggregator.

Does your system allow users to make claims analogous to traditional retirement prior to the final verification of the underlying environmental claim?
The CCO2 token are overcollateralized and released in aprox the same rate as the trees are absorbing CO2. Therefore, each token represents an actual kilogram of absorbed CO2.
If your system facilitates forward or ex-ante credits, how do you ensure that no claims are made on the underlying environmental benefit until after verification and subsequent retirement?
N/A

Co-benefits

Many projects that issue carbon credits under traditional standards have so-called “co-benefits” associated with their activities, typically classified according to the Sustainable Development Goals. How does your standard assign and quantity co-benefits?

  1. All projects onboarded by Coorest generate their own CCO2 tokens. Coorest isn’t the custodian of their tokens, making us a decentralised platform. Proceeds of CCO2 token sales go directly to the green projects.
  2. Coorest introduces the proof of carbon compensation certificates (PoCC) that can only be generated by burning CCO2 tokens, thereby, removing the double counting/claiming issue.

Industry Acceptance

Ultimately the value of any environmental service credit derives from the willingness of an end-user to purchase and consume that credit for its intended end-use (a.k.a. retirement). Traditional corporate buyers, who make up the bulk of current demand for carbon credits, look to industry organizations like the International Carbon Reduction and Offset Alliance (ICROA) or Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) for guidance on which carbon credits are appropriate for their needs. As such, recognition of any new standard by these bodies goes a long way toward indicating the level of acceptance those credits will receive among existing market participants.
** Has your system been endorsed by any of the mainstream VCM associations, such as ICROA or CORSIA? If not, are you pursuing such an endorsement?**
Not yet, we are open to pursuing ICROA endorsement.

** Have any traditional buyers (e.g. corporates) purchased and retired credits issued under your system? If so, please indicate the estimated volumes retired in the past year. If no retirements have occurred in the past year, please provide an estimate based on current buyer commitments.**
Both retail and small companies have used CCO2 tokens to generate 141 PoCC certificates. 39,733 kilograms have been retired since October 2022.
Proof of Carbon Compensation certificates contract:
https://polygonscan.com/token/0x51cf819352fc536ad8a84214922615c160bb497d

Coorest token users:
1.Apparel group / Tommy Hilfiger purchased 100 NFTrees that generate 25.000 CCO2 tokens yearly.
2.DexTrac (Chainlink node operator)
3.AG digital marketing agency

#Interest in partnering with KlimaDAO
Coorest views KlimaDAO as a well established company in the blockchain VCM. This partnership comes as a logical next step for Coorest as both companies operate on Polygon and serve the same carbon compensation needs. Collaborating expands KlimaDAO’s offering with new crypto native assets and helps Coorest grow liquidity for CCO2 tokens.

Carbonmark listing

We would like to list CCO2s on Carbonmark and eventually list the fractionalized NFTrees that represent ownership of the carbon projects themselves.

Hi Nick,

Thank you for taking the time to respond to our Alternative Standards Framework and for taking the initiative on this RFC. At a high level I find the technology you have developed, your partnership with Chainlink, and the concept of automated offset issuance via smart contracts to be compelling. I’m also glad to see that your credit class has received some traction and that you’ve helped major companies such as Tommy Hilfiger offset a portion of their emissions.

I have a few questions regarding the scalability of your system and the pipeline for future projects:

1) Over the next two years how many Coorest carbon projects do you see being launched? How many NFTrees and carbon tonnes would this correspond to?
2) Where have Coorest’s carbon projects been developed thus far? How will you expand the number of geographies supported by your system?
3) What is Coorest’s approach to building demand for CCO2s?
4) Are there other services you are looking to integrate into your tokens (e.g. insurance)?

Thanks!

Hi,

Thanks for your fast response.

1)Coorest will do 1 in-house tree planting project each year the exact amount of NFTrees is still to be decided. We wil shift our focus to onboarding more green projects and farmers to enable to them to generate CCO2 tokens.

2)Coorest in-house tree planting / carbon projects have been developed in Spain, region of Aragon. We have onboarded projects in Angola, Kenia and Argenita so far and projects from other countries (Asia/Europe) are now in our onboarding pipeline. We expand through affiliates and partners globally to speed up our onboarding activities.

3)We focus on the fundamentals for the CCO2 tokens primarily to show that we have a transparent and trustworthy carbon token bt integration dMRV directly into our CCO2 token minting functionality. Secondary we are co-developing solution to make it easy for non-crypto customers to interact with our CCO2 tokens. This is a fiat-on ramp for carbon compensation (accessible via our website) and an API for webshop integration. We focus on potential customers based in Europe because this is the biggest market and ready for new carbon compensation solutions.

4) Yes, we are co-developing parametric insurance together with Etherisc, Floodlight, and Chainlink for the trees and CCO2 tokens. We want to make this insurance product available to all carbon projects in the industry. read more about it here: https://coorest.io/first-on-chain-carbon-insurance/ . But this needs more research and funding to go into full production.

gr. Nick

5 days later

Glad to see this proposal come through, and based what Coorest has achieved already in terms of adoption, dMRV, and partnerships - I think it could become one of the most popular assets bought through Provide ECO.

Listing CCO2 through KlimaDAO would make it much easier for CCO2 token to integrate Coorest to Provide ECO than if we were to ever do a one-off integration strictly with Coorest's smart contracts.

Establishing a straight line from Etherisc crop insurance to carbon offset production is a very savvy move by the way. It guarantees small holder farmers economic security to undergo the investment into producing carbon offsets while setting up a data pipeline to make the offsets really high quality. Really improves the end-to-end net zero and ESG goals in agricultural supply chain.

    This is very exciting to see – Coorest is using technology to advance the supply side of the VCM, and bringing this supply into the KlimaDAO ecosystem would be a growth catalyst.

    Would be keen to learn more about Coorest's future pipeline of projects, particularly in Southeast Asia.

    Do $CCO2 tokens currently exist in any liquidity pools / what have been the factors contributing to their price discovery?

      ryfleisch Yes agree. Provide ECO would be a very good combination for us. What they have built is key to corporate adoption for crypto native carbon assets. Coorest PoCC certificates can easily be generated on-chain removing double-claiming errors. The insurance product is a very important piece of the carbon puzzle in order to bring credibility to the entire carbon market. Especially if we can open it to all carbon projects.

      rittaaka We are currently onboarding a project from Asia (China). We have a collab with Farmsent (www.farmsent.io) and they focus on farmers in Indonesia that we can possibly onboard for CCO2 token generation. At this moment no LP has been set up for CCO2 tokens. They are now mainly sold OTC, Moonfarm and via our own fiat on-ramp through our main website (https://www.arbon.one/checkout/coorest-offset). For price discovery, we looked at the European market (EU ETS) and decided to follow that price but 30% lower. Our vision is to create one global price for carbon.

        Coorest Interesting, thanks!
        Keen to see how KlimaDAO infrastructure can aid in price discovery and enable scale-up of demand for the credits generated by Coorest projects.

          rittaaka To facilitate scaling and price discovery a liquidity pool on a DEX would be the next step in my opinion.

          Coorest has created its own standard for climate projects and a single methodology.

          Also Coorest has issued 10,000 NFTrees and about a million of CO2 tokens.

          At the same time the registry of Coorest climate projects is not public (if it exists at all).

          I don`t have understanding:

          • which projects are registered or are in the process of registration
          • of projects documentation
          • of token`s quality.

          The token price strategy is strange too (70% of of EU ETS AlLowance).
          The average price of retired carbon credits in 2022 was $8.
          To compensate the ton of CO2 using Coorest tokens companies or individuals need to pay 85 Euro.

          I think it's too early to list Coorest tokens on the carbonmark.
          This will not bring any profit to either side.
          But it may undermine faith in the DVCM, carbonmark and KlimaDAO.

          I made a brief overview of the Coorest project in my blog. If you're interested, you can take a look. It is for a Russian-speaking audience, use a translator https://carbonadvisor.org/vozniknovenie-novyh-standartov-vypuska-uglerodnyh-edinicz-na-primere-coorest

            carbonadvisor
            Hi,

            All our projects that generate CO2 tokens can be found the in the CCS registry, as mentioned in the posts above.

            Regarding the token price. We see the EU ETS as a leading indicator for carbon prices. Coorest is focused on offering a new carbon asset with higher quality guarantees. This also brings costs that we need to offset.
            Cost that are reflected in the CO2 tokens price:

            1. Monthly dMRV data to validate CO2 token minting (satellite data, analysis and Chainlink Oracle operations)
            2. Free onboarding for farmers / green projects
            3. Software development (funding for insurance product, R&D)
            4. Additionality of carbon projects (All newly planted projects)

            In our experience people and companies are willing to pay a higher price when buying smaller quantities (micro offsets) and get a higher level of transparency. For bigger amounts of offsets, green projects, and farmers can always be asked to sell at lower prices. Coorest isn't the custodian of the CCO2 tokens generated by these projects.

              1. About NFTrees; batch 1 is going to produce fruits and sale of those fruits in food market are going to generate rewards, what are these rewards?
                Is the sales monitored somehow? It just sounds so complex at this point.

              2.Are those satellite images visible for public?

              1. How much cco2 tokens Coorest holds and how much would be listed on Carbonmark?
                Thanks.

                Nikodemos

                Hi,

                1. The rewards will be paid out in stablecoins. Batch 1 are all Fig trees and will be sold via another company that collects the figs and sells them to supermarkets. The sales are monitored by Coorest management. The land and assets related to Batch 1 are owned by Coorest.

                2. We upload pictures of the projects in the CCS registry. We plan to improve the visibility of the datasets in our dMRV 2.0 that we are developing with Floodlight.

                3. Coorest only holds 8% of the CCO2 token supply. NFTree holders and onboarded projects hold 92% of CCO2 token supply as we are decentralized on the project level. We can ask our green projects and farmers how much they want to list and at what price.

                Coorest
                Hi, Nick.

                Thanks for the clarification.
                I've studied your standard carefully because we are discussing the implementation of the similar scheme in my country.

                I like the technical approach, The quality of carbon credits can be improved.

                I would add:

                • Transparency. There is no procedure for discussing climate projects with local communities, as implemented in VCS and GS. The registry of climate projects is in the form of tabs without the ability to search. The social and environmental effects of projects are not always included. The correlation of the climate project with the SDGs is not given.

                • Tracking. It is necessary to determine the climate project that released the token. It makes sense to create Pools, like KlimaDAO or Flow carbon did

                • Robust third party validation and verification. It makes sense to accreditate a third party and delegate the validation procedure to it. To make the project verification procedure understandable to a person without deep knowledge of blockchain

                • No double counting. To develop an effective procedure to avoid it.

                • Additionalityt. Planting orchards is profitable without selling carbon credits.

                CCP is a good marker for quality https://icvcm.org/the-core-carbon-principles/

                As for the price per token, an excellent marker is MCO2. It`s advantages are VCS and listing on the main crypto exchanges. https://coinmarketcap.com/currencies/moss-carbon-credit/

                sincerely,
                Dmitri

                  carbonadvisor

                  Hi Dimitri,

                  Transparency: In our onboarding procedure we engage with projects continuously. Each onboarded project is involved in its own local community, therefore, we discuss with multiple communities through our partners. We provide their social media details in the CCS for other people to follow the onboarded projects and communities.

                  Tracking: It's possible to track all the wallets of onboarded projects. Because all projects generate the same fungible CO2 token, it's not necessary to create project pools. The CCS criteria allows all projects to generate the same CCO2 token. This will make it easier to develop the natural disaster insurance product.

                  Third party validation is done through our satellite data partner. As they monitor all projects continuously. Our smart contract are developed in such a way that without their data projetcs can't claim their CCO2 tokens. Coorest doesn't control this.

                  Double counting is impossible in our system because the tokens only exist on-chain. Therefore, the minting and burning of the CCO2 tokens can be tracked without having to worry about bridges.

                  Additionality in the CCS looks at newly planted trees and not at the profitability of projects. We believe it's important to include yield-bearing trees in the standard because they provide income and food to local communities. Deforestation has often an economic root cause which we are trying to improve. Coorest thinks it's important that both environmental and economic impact go hand in hand. Therefore, farmers play an important role in our ecosystem. Want to so these farmers grow by earning more income enabling them to buy more land, plant more trees, hire more workers, and produce more food. The best weapon against deforestation, poaching, and pollution is growing local wealth.

                  We see that the market, mainly consumers in Europe, is becoming critical to carbon credits related to projects in South America / Amazon and forest preservation. Often these projects are opaque, untransparent and their impact questionable. We see that The Guardian article pointed made people/businesses very critical regarding kinds of projects. Coorest sees a shift to more transparent carbon offsets and people are willing to pay a premium for that. Example: https://www.sinkit.org/projects.

                  Coorest can guarantee the buyers of CCO2 tokens that their money is directly going to our onboarded projects and there is no possibility for double counting of these CCO2 tokens due to the implementation of the PoCC certificates.

                  Kind regards,
                  Nick

                  First off, thanks for this RFC - it's great to see alternative standards like Coorest putting themselves forward to be considered for inclusion in KlimaDAO's infrastructure via the public governance process.

                  carbonadvisor raises some important concerns about pricing, but in my view this is part of the appeal of Carbonmark's fixed pricing model as a complement to the liquid pools e.g. BCT. Would love to see multiple listings on Carbonmark for different amounts of CCO2 at different price points to get some price discovery going.

                  I'm curious to learn more about a few areas:
                  1. Can you share more details or any references about how the Floodlight oracle works? Where does the underlying data that the oracle nodes are reading come from? How many oracle nodes are there? Is it relying on a single modality of visual satellite data from a single source, or do you plan to corroborate the observed sequestration with multiple data streams?

                  2. Could you share any information about future methodologies Coorest may develop? Have you determined whether those additional methodologies will be issued under the same CCO2 fungible token, or under a separate token per methodology?

                  In particular, the current design of CCO2 is more similar to the MCO2 token (which represents a weighted basket of half a dozen roughly comparable Verra REDD projects) - as opposed to the selectable pool design of e.g. Toucan's NCT or C3's UBO.

                  3. Longer term, do you have any thoughts on the trade-off between using a single weighted basket token vs. a selectable pool of projects?

                  For context, in my view, there is an unavoidable compromise between liquidity and fungibility. That said, the project-vintage token approach combined with selectable pooling seems a more flexible system that can be adapted more easily over time compared with a single fungible token like CCO2 is at the moment.

                  4. Could you share any information about the size of the project pipeline? How much supply do you expect to be issued over the next, say, one year? 3 years?

                    MarcusAurelius

                    Thanks for thought about the necessity of token specification.
                    Tokens CO2 will have low value without defining the type of climate project, vintage .

                    It is necessary to release carbon tokens to the DVCM very carefully.
                    Companies like Particula are preparing ratings.
                    Project will be over if it receives several negative ratings.

                      carbonadvisor

                      At Coorest we believe in Carbon Standard criteria (additionally), fungibility, on-chain MRV and traceability. We now companies like Particula are trying to set ratings for the market. We are in contact with them and discussed ratings. Crypto native carbon assets will be able to create complete standards for ratings through the use of dMRV and smart contract for minting and retirement of CO2 tokens. All project types are defined in the CCS registry because they adhere to the same CCS criteria we are able to have a fungible token. This is very important for follow-up products like natural disaster insurance for these projects.

                        MarcusAurelius

                        1. Floodlight aggregates satellite data, in this case, biomass data is used as an indicator for CO2 absorption. Every month Floodlight put the outcome of their analysis on-chain because smart contracts can't digest this raw data. Each project has a project ID, Coorest smart contract makes an Oracle once a month. The outcome of the Orcal call determines if a project can claim CCO2 tokens. If biomass data shows negative, indicating the trees are lost, the minting of CCO2 tokens is locked. The raw data and the algo for analyzing the data happens at the side of Floodlight. Right now, this is the only Oracle for now. We are developing dMRV 2.0 at this moment to add more data and display more collected satellite data and store that on-chain.

                        2.We are focused on setting new standards for dMRV and crypto-native carbon assets. at this moment we use satellite data because it's the most scalable tech for dMRV. Over time we will ad on-ground and in-the-ground sensor data to our dMRV to enrich data collection through the triangulation of data sources. Coorest will stick with nature / tree planting projects for the foreseeable future. Other methodologies can only be issued under the same CCO2 token if these projects can comply with the dMRV data collection criteria we have for now. For blue carbon projects for example we will need a new token bCCO2 for example.

                        1. For the long-term we believe fungibility is key to success. It helps us to set up: 1. Insurance product 2. Sales channels are sourced from the same pool of CCO2 tokens 3.No competition between projects for selling their CCO2 tokens through our sales channels. 4. Fund all onboarded projects at the same time through our sales channels.

                        2. We have multiple projects of different sizes in the pipeline. This year we will onboard between 100 and 800 hectares. Within 3 years we will have onboarded a minimum of 10.000 hectares. But this is hard to predict because we are getting resources in place to enhance our onboarding capacity.

                          I would like to make an additional point regarding ratings. At Coorest we think rating will be determined by the following criteria:

                          1. dMRV: which data sources / how is the data used / frequency of data heartbeats / where is the data stored
                          2. additionality: New planted trees / newly deployed carbon capture initiatives
                          3. transparency: who is controlling what / where does the money go from selling carbon assets
                          4. decentralization: How is the issuance and retirement of carbon assets controlled (decentralized vs centralised)

                          For these reasons, we chose to go, crypto native, because it allows us to have a different architecture design compared to non-crypto native carbon assets. Everything that deals with bridging off-chain to on-chain will have centralized bottlenecks preventing fully utilizing dMRV, transparency, and decentralization.