Environmental, social, and governance (ESG) and climate-specific reporting has traditionally been voluntary, but the world is quickly moving towards mandatory disclosure. As these detailed reports become increasingly common, so too does the public’s consumption of them. Under the public’s watchful eye, more companies are proactively setting emissions reduction targets and systematically working toward achieving them.
Many emissions reduction strategies follow the “avoid, reduce, and offset” approach. Companies first prioritize halting as many environmentally harmful activities as possible and then work to make remaining processes as efficient and sustainable as possible. After those two strategies, finally, companies will look to offset any remaining emissions stemming from their business.
There are a number of different credit types that can be purchased to offset emissions. Two of the most popular types are nature-based carbon credits and renewable energy certificates (RECs). Nature-based credits are generated from projects that protect, restore, or enhance natural ecosystems. These projects can include things like afforestation, reforestation, wetland restoration, and soil carbon sequestration. On the other hand, RECs are generated from producing renewable energy — generally solar, wind, or hydropower.
Nature-based Carbon Credits vs. Energy Production-based Credits
Due to the wide variety of projects that can generate nature-based carbon credits, this asset type has been popular amongst companies. In recent years, however, there has been growing criticism around many nature-based carbon credits, with some studies suggesting the majority of these credits generated from forest preservation could be “phantom credits” that do not represent genuine carbon reductions. There are many reasons why these often low-quality credits are criticized, including:
- It can be difficult to prove that the forests generating the credits were otherwise going to be destroyed;
- It is challenging to precisely measure the amount of carbon that is sequestered by forests; and
- These credits are often considered temporary because, eventually, trees will naturally die and release their stored carbon.
In contrast, credits generated from the production of renewable or lower-emission forms of energy are of higher quality because they are tied to a specific, measurable unit of energy produced. When a company purchases a credit created from energy production, it can feel confident that it directly supports lower—emission energy production— no guessing or estimating is involved.
EarnDLT, a blockchain-based emissions accounting and trading platform, is expanding access to credits generated from differentiated energy production, such as differentiated natural gas, renewable natural gas, renewable biofuels, and more. These forms of energy have lower emissions, specifically methane which is a very potent greenhouse gas, than their alternatives and can therefore generate highly valuable offsetting credits at scale.
Earn’s solution is built on a private blockchain, also known as distributed ledger technology, which enhances buyers’ trust in the credits they purchase. Because data stored on the blockchain is immutable, companies receive a complete and accurate record of energy production, the associated emissions, and other ESG data related to their credits.
Here’s how Earn’s credits, which are called Differentiated Energy Attribute Tokens (DEATs), compare to nature-based carbon credits and traditional RECs:
The Lower Cost of Earn’s Differentiated Energy Attribute Tokens
EarnDLT’s credits are high quality, providing companies with detailed, authentic emissions and provenance data — they can also significantly reduce the amount a company must spend to offset their emissions related to natural gas.
DEATs are generated from differentiated energy, which has a significantly lower methane intensity than the national average. Put simply, this means companies will be responsible for fewer Metric Tons of CO2e and, therefore, can spend much less to offset these emissions. Here’s a breakdown of what that could look like:
Offsetting emissions through the purchasing of credits can be an effective way for companies to reduce their overall environmental impact and achieve corporate emissions reduction goals. When designing these strategies, however, it’s important to know that not all credits are created equally — their effectiveness depends on the specific project or program they are generated from. Earn’s Differentiated Energy Attribute Tokens are generated from the actual production of differentiated energy, are stored and distributed on the blockchain for authenticity, and can significantly lessen a company’s offsetting costs.
If you’re a company looking to purchase DEATs to offset your emissions, submit a pricing inquiry here.