International Finance Corp (IFC), a World Bank affiliate, told Reuters it is backing a blockchain-enabled platform to trade carbon offsets; aiming to attract more support from institutional investors for climate-friendly projects in emerging markets.
It is a bet that blockchain – a digital database with information that can be publicly share within a large decentralise network – will boost the use of carbon offsets to a greater extent than more traditional methods.
These credits are in use by companies and organisations to offset emissions when accounting for their carbon footprint. They are by projects that compensate for emissions, such as tree planting or creating solar and wind power.
Several financial technology firms have sprung up over the last year to turn carbon offsets into digital tokens, yet the market has struggled to gain traction with companies and institutional investors amid concerns about the origin and environmental benefits of some of the traded credits.
Blockchain technology has also been criticise by environmentalists as being too energy intensive.