Indonesia weighs blockchain-powered carbon trading scheme • TechCrunch
Indonesia wants to direct the blockchain craze towards greener use. The Indonesia Stock Exchange (IDX) has signed a memorandum of understanding with Metaverse Green Exchange (MVGX), a Singaporean startup specializing in digital exchange technology. The intended collaboration is centered around IDX’s emissions trading scheme slated to launch in 2025, and MVGX’s mission is to help IDX build a carbon registry and exchange with blockchain as an infrastructure layer.
Bo Bai, CEO and co-founder of MVGX, tells TechCrunch that the use of blockchain in carbon trading solves the problem of double counting where two entities or an entity and a country claim the same climate action. Founded in 2018, MVGX is licensed By the Singapore Financial Authority to provide securities and custody services. By offering SaaS to commercialize carbon credits, the startup’s focus is on “emerging markets that seek to provide access to emissions reduction projects internationally”.
“Infrastructure also provides an immutable record of credit creation and ownership, as well as an immutable record of green project performance to which the carbon credit is linked, to date,” Bay explains.
Indonesia has joined a group of countries that are stepping up their environmental accountability through a financial mechanism. As of July, 46 countries are pricing emissions through carbon taxes or emissions trading schemes (ETS), according to the International Monetary Fund.
The Indonesian government has recognized the vital role that the financial services industry can play in promoting the country’s sustainability commitments. “IDX is currently preparing for the possibility of becoming a carbon exchange in Indonesia and has started discussions with several parties to deepen our knowledge,” Jeffrey Hendrick, director of business development at IDX, says in a statement.
Carbon trading is not a panacea for climate change. The mechanism induces carbon emitters to be less polluters or they will need to buy from those with excess carbon credits to offset their carbon footprint. The capital generated from sales of carbon credits could then go toward financing conservation efforts, at least in theory. But One of the biggest criticisms The mechanism is that compensation allows entities to claim carbon neutrality without making a significant effort to reduce emissions in the first place.
While blockchain is believed to help create a simplified public record of carbon trading, it does not address incentive issues related to compensation. Nor does it guarantee the quality of the emissions reductions from credit issuers or whether these claims will hold up in the long term.
Crypto’s reception in the world of carbon trading isn’t particularly warm either. The popularity of startups tokenizing carbon credits has skyrocketed in the past year as they promise to attract more investors to the world of carbon trading. One of the busiest projects is Toucan, which started late last year by tying credits issued by Verra, the carbon trading industry standard holder, onto the blockchain and “withdrawing” the credits as tradable tokens. In May, Vera forbidden Convert retired credits into cryptocurrency “on the grounds that retirement law is widely understood to refer to the consumption of the environmental benefit of credit.”
The backlash from Toucan has not stopped countries from adopting blockchain carbon trading. Aside from a potential partnership with Indonesia, MVGX has also worked with carbon trading initiatives in China, including Guizhou Green Finance and Emissions Exchange, and is in advanced talks with relevant authorities in Malaysia and Taiwan to collaborate on infrastructure projects, according to Pai.