Liverpool, United Kingdom

Liverpool City Council in the UK is set to launch a year-long trial using carbon offsetting and blockchain technology to more than offset its greenhouse gas emissions by the end of 2020 and become what it calls “the world’s first carbon-positive city” 

It has partnered with the Poseidon Foundation, which applies blockchain technology to carbon markets to create a system that transparently stores details of carbon credits and their transactions. Poseidon claims that this introduces a level of traceability to each gram of carbon transacted, allowing them to bring carbon markets to the retail level, so that in theory anyone may purchase verifiable offsets for their polluting activities. 

The system uses tokens to facilitate these transactions, and “smart” contracts – in the form of algorithms – that execute a specific process when certain requirements have been met along each step of the carbon credit lifecycle.

At the other end of the transaction are conservation and management projects that are actively preventing the destruction of forests. These will be verified as Triple Gold REDD+ credits by Ecosphere+, which manages tropical conservation land banks, using a carbon accounting methodology that is embodied in the Paris Agreement.

As part of the agreement with Liverpool’s local authority, Poseidon will relocate its operations to the city to support the city’s new climate positive strategy in the year-long trial. The company is already working closely with Liverpool-based BAC Mono to create a “climate positive car”.

As part of the trial it will work with local schools, universities and businesses to develop educational programs around climate impact that will play a vital role in the council’s commitment to cut its overall carbon emissions by 40 per cent by 2030 – the equivalent of protecting 136 million trees or 338,000 football fields, which is claimed could create over 3500 jobs in the Peruvian Amazon.

Liverpool’s aims

Liverpool City Council is committed to becoming the first “climate positive authority” in the world by the end of 2018 and ultimately the first climate positive city in the world by the end of 2020, and aims to showcase its efforts at the UN World Cities Day event on 31 October.

It is currently installing over 15,000 LED streetlights across 2000 streets, and since 2012 has cut over 558,000 tonnes of CO2. The authority has holdings in the city’s cruise terminal and airport. All services, from railways, public baths and electric lighting to subscription libraries and topical medicine, will be affected by the new deal.

Liverpool mayor Joe Anderson is to host a strategic business summit in September 2018 with businesses, social enterprises and not-for-profits from across the city region, where they will explore how Poseidon can help companies become climate positive. 

According to Anderson, “Liverpool City Council has a significant carbon footprint because of all the services we provide – be it street lighting, the running of countless properties like St George’s Hall or the Arena and our fleet of vehicles.

“We are already making significant strides to reduce our impact by 40 per cent by 2030, but that is not enough and partnering with Poseidon means we can explore radical new ways to do more.”

He said he was “thrilled” to “bring this cutting-edge technology to our city”.

According to Laszlo Giricz, founder and CEO of Poseidon, this is the first time a city is using blockchain technology to go beyond rebalancing its carbon footprint.

“Liverpool is a trailblazer and a shining example to other cities in the UK and across the world on what can be achieved through harnessing the power of technology to meet one of humanity’s greatest challenges.” 

He said since the platform was fully scalable, other cities could follow suit. 

How it works 

The system uses carbon pricing. Putting a price on carbon is what many activists have been saying is missing from the global fight against climate change.

Where it does happen, and the proceeds are channelled into more sustainable activities, it not only discourages polluting activities but provides much-needed investment for climate-saving projects.

In this system, for each tonne of carbon dioxide being offset, one carbon credit is allocated, which is then available to trade. The credits are developed by a company called Ecosphere+, a member of the €100 million (AU$158m) Althelia Climate Fund, the largest portfolio of forest carbon projects in the world.

Emission reduction projects have yet to be created to satisfy Liverpool’s needs. Pioneering early projects have begun implementing “bottom-up” REDD+ type activities in Peru and Guatemala in advance of national or regional ‘top-down’ systems being implemented.

These projects use international standards to account for their climate, environmental and social impacts: the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity (CCB) Standard.

These assess the projects across seven categories: climate change mitigation, improving the ecology, biodiversity and endangered species, providing fair livelihoods, inclusivity and gender rights, providing social enterprises, and in achieving balanced returns for stakeholders.

With the climate benefits of sustainable land use and conservation activities quantified and valued, they are ready to be used as verified greenhouse gas emissions reductions or “carbon credits”. Ecosphere+ sells these to businesses and individuals so they can carry on polluting with a cleaner conscience.

Poseidon and Liverpool City Council believes that blockchain technology has the potential to streamline this process and tackle the current perception caused by multiple standards and systems in the offsetting market that frequently lead buyers to lack trust that the offsets are genuine, and that there is no double accounting, for instance. 

Eighty per cent of the cost to Liverpool council will go towards purchasing carbon credits with the remaining amount invested in developing the blockchain platform.

Poseidon piloted their system with Ben & Jerry’s Scoop Store in London’s Soho where, during two months in summer 2018, 2000 trees in the Peruvian Amazon were conserved.

Stellar platform

The system uses the Stellar cryptocurrency system. Stellar has already partnered with IBM and carbon credits startup Veridium Labs to trade carbon credits in an open market.

In this partnership, a formula created by Veridium establishes the value of each carbon credit token, the Stellar blockchain permits the ledger which stores them and the transactions, and IBM manages the trading activity.

In answer to the criticism that blockchain uses an extortionate amount of energy, a spokesman for the council pointed to a Poseidon white paper, quoting Stellar themselves as a source, that the energy cost per transaction was 0.03 Watt-hours, compared to 634,000Wh for Bitcoin.

He said: “For Liverpool, this is also about exploring and utilising Poseidon’s platform – which doesn’t exist anywhere in the world – and using that as an opportunity to get a fundamental change in people (and organisation’s) behaviour. This is a start. The council will look at a much wider program over the next 12 months (which will not just be on offsetting) and that this is an investment opportunity for Liverpool as well as the underpinning climate change/focus of it.

“The council is also working with its service delivery partners on its vehicle replacement policy including electric and compressed natural gas products and has a supported cycle hire scheme,” he added.

Is offsetting effective when applied to forest management?

Liverpool is not quite alone in purchasing forest carbon offsetting, and research in California has answered that question – at least for California.

The state has piloted a system that allows forest owners around the United States to sell carbon credits to companies required by the state to reduce emissions. California aims to reach 1990 levels of greenhouse gases by 2020, and 40 per cent below 1990 levels by 2030 and uses a cap and trade market to achieve this. 

Analysis by researchers at Stanford University has found that the initiative has valuable environmental benefits beyond just offsetting greenhouse gases, because forest offsets mandate forest owners to change the way they manage their land so that their trees will store more carbon. This is achieved by felling fewer trees or reforesting. Professional foresters vet the changes to ensure they are effective. 

For each additional ton of carbon dioxide their trees store, forest owners earn a credit – worth about $10 – to sell to Californian companies required to reduce or offset their greenhouse gas emissions. Since it started in 2013, the program has earned forest owners about $250 million, while offsetting 25 million tons of carbon – an amount equal to five per cent of California’s annual passenger vehicle emissions.

The Stanford analysis found that the program led to emissions reductions that wouldn’t have occurred otherwise, and increased biodiversity and conservation. However they do warn against using forest offsets in large numbers because they may distract from urgent and drastic emissions reduction priorities elsewhere. 

David Thorpe’s two new books are Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference. He’s also the author of Energy Management in Building and Sustainable Home Refurbishment.

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  1. You can direct your blind associates, those who absorb information better through auditory pathways , or those who like the smooth sound of my voice to for an audio version of this article.

    There are a number of considerations and convolutions relating to carbon accounting and offsetting, the complexity of which is worthy of involved analysis, especially as it comes online as a major element in humanity’s attempts to be wiser and more mild mannered inhabitants of this precious and grand planet.