Putting the Paris Agreement on the Blockchain Part II — Introducing the BITMO.

This was first published in Noteworthy - The Journal Blog. View original post here.

In our previous post, we highlight the case for linking international efforts to reduce greenhouse gas emissions by putting the Paris Agreement on the blockchain. In this post, we’ll dig deeper into our proposed unit of account by introducing the “Blockchain Internationally Transferred Mitigation Outcome”, or BITMO.

Under Article 6.2 of the Paris Agreement, a unit of account called the Internationally Transferred Mitigation Outcome (ITMO) was proposed, contemplating a secure mechanism for transferring emissions reductions achievements between countries. Under the United Nations Framework Convention on Climate Change (UNFCCC), each country in the world is responsible for their own sovereign emissions and emissions reductions. Therefore, a tool was needed to track transfer of units between national accounts. The Kyoto Protocol set the stage with single-entry bookkeeping for flow of proven emissions reductions from countries that did not have carbon targets to those that did. The Paris Agreement further requires double-entry bookkeeping because all nations are integrated into this system. The transfer of a credit to one country must initiate a corresponding debit in the other. When it comes to maintaining such a ledger, a blockchain protocol solution with an open and shared database is a logical fit.

Blockchain presents a picture-perfect tool for developing an Internationally Transferred Mitigation Outcome (ITMO) system for the Paris Agreement:

a) Immutable storage of a carbon unit’s creation (“genesis”) data is a necessary component of an ITMO. This information must be transparent and immediately traceable. Blockchain technology and a distributed database will provide this through the Non-Fungible Token (NFT) and Unique Fungible Token (UFT) that Blockchain for Climate Foundation is developing with Matt Lockyer and the open source community of NFTy Magicians.

b) One-upping the evident need for “double entry bookkeeping” of transfers between countries, future-proofing the BITMO requires a straightforward, lightweight way to add a timestamp to each transfer. This integral function of a blockchain is known as “triple-entry bookkeeping” and will be critical as trade volumes and frequencies for the BITMO grow.

c) Open source, transparent design of BITMO infrastructure will go a long way to building trust among the varied countries of the world. We need a system that enables emissions reductions collaboration between countries that are best of friends, mortal enemies, or simply in flux due to current political events. Blockchain based protocols allow parties that do NOT trust each other to still engage in transactions that involve scarce resources, value and commerce. We believe that the open source and collaborative nature of this project will be a positive contribution to the still-contentious, longer-range process of building the broad ITMO ecosystem.

d) As we deploy the BITMO project, we will mint the tools to put ITMOs on the blockchain in the near future. The “carbon clubs” concept of convening only those parties interested in participation allows transfers to begin promptly, rather than waiting for completion of a fully negotiated system. We hope this will get the ball rolling, incentivize new emissions reductions, and provide valuable design insight for integration into subsequent development of the broad ITMO system. The ability to implement an “extensible” system on existing/readily developable blockchain infrastructure today, taking into consideration future growth of tomorrow, is definitely a “killer app.”

e) A bit of an x-factor, but we believe pertinent to the case for creating the BITMO, is the opportunity to tap into the incredible energy, inspiration and goodwill being generated by the blockchain community. Along with the thousands of great minds developing projects, and billions of dollars being invested into tools & infrastructure — social and environmental good is coming to the fore as a priority. Binance, a cryptocurrency exchange has set up a $1 billion USD fund for startups and appointed a charity ambassador. Coinbase CEO Brian Armstrong has set up a Cryptocurrency Charity fund targeting $1 billion USD dedicated for charity.

There are huge amounts of talent, money and focus flowing into the blockchain space. We are seeking to capitalize on this momentum as a catalyst to provide an open source, public utility infrastructure to the world. We believe this can help turbocharge the timely development of the BITMO, and meaningfully advance an emissions reductions transfer system available for use by all nations.

If you’d like to get involved with the BITMO Open Source project, please drop us a line at info@blockchainforclimate.org