Exploring the Potential of Emerging Technologies for Connecting Climate Markets
Climate Warehouse
The Climate Warehouse will be a public good data layer built on blockchain technology to facilitate the transparent sharing and reporting of climate project information and their issuances. Once operational, the Climate Warehouse will reflect the data from connected independent standard registry systems and governmental systems to enable the traceability of project and unit information.
Implementation
Implementation
The World Bank is prototyping the Climate Warehouse and running simulation testing with partnering governments and organizations to jointly learn about supporting technologies, and integrating registry systems while co-creating the design, functions and shared data model for the Warehouse. Observer participants from market creators, academics, other multilateral banks and technologists provide feedback on future usages of the Climate Warehouse, ensuring diverse viewpoints shape a future operational Warehouse.
Purpose
Purpose
By connecting registries together through a decentralized infrastructure, and making the information in the Climate Warehouse publicly available, it will be possible to identify double counting risks that can damage the integrity of markets. The data layer created by the Warehouse can be used to support data sharing and it provides backbone infrastructure that can support services built by the public and private sector to support market activity, such as compliance reporting, transacting, and benchmarking services.
Usage
Usage
Participants in the Climate Warehouse Simulation use scenario scripts to test out the prototype, mimicking registry functions while viewing the information displayed through the user interface on all connected registries. Simulation testing enable participants to try out processes and the data needed to support Article 6.2 of the Paris Agreement, such as the international transfer of mitigation outcomes. This not only informs the specifications needed to build out the Climate Warehouse, but the minimum requirements that will be needed for country registry systems.
Once Operational, the Climate Warehouse can be used to ease integration between disparate registry systems. Data on projects and units can be easily transferred between systems and the consolidated information in the Warehouse will provide the basis for compliance reporting and auditing of information. Registries integrating with the Climate Warehouse are responsible for their projects and the quality of data that they share with the Warehouse. Through transparently providing information on the lifecycle of projects, their issued units, and the movement of units as they are transferred between registry systems, registries provide assurances through the Climate Warehouse that units are not being double counted or spent.
Current Involvement
Current Involvement
Phase III:
The World Bank has initiated the third phase of the testing and simulation activities in January 2022. The objective of this phase is to test the Climate Warehouse on an open-source, interoperable and permissionless public blockchain platform, and develop a prototype to operationalize the Climate Warehouse consistent with the recommendations from the 6-month consultation on the governance and financing model of the Climate Warehouse that was completed in February 2022. The consultation was co-convened by the International Emissions Trading Association, the Government of Singapore and the World Bank.
The third simulation will run from January 2022 to August 2022 involving active participants and observers from simulation II as well as new stakeholders (to be released soon).
Phase II:
The World Bank has completed the second phase of the testing and simulation activities. This phased focused on testing the utility of the Climate Warehouse’s functions to track information and identify double counting risks. The testing and simulation also improved understanding of the feasibility of peer-to-peer integration across decentralized registry systems and identified potential minimum data and technical requirements for registry systems.
The second simulation running from November 2019 to December 2021 involved the following active partners:
The governments of:
Japan, Chile, Singapore, Peru, Costa Rica, Switzerland
The following International Standards:
The Gold Standard, Verra, American Carbon Reserve, Climate Action Reserve, and Global Carbon Council
The following sub-national actors:
Kenya Electricity Generating Company (KenGen), Energy Efficiency Services Limited (EESL)
Regional registries:
EcoRegistry, BV Rio
Phase I:
From August 2019 to November 2019, the World Bank completed the first phase of the testing and simulation activities. The Climate Warehouse decentralized meta-registry system showed potential to provide an inclusive platform to connect the different country and institutional registry systems and support much-needed visibility to climate activities, and enhance overall market activity transparency.
The first simulation involved the following active partners:
The governments of:
Japan, Chile
The following International Standards:
The Gold Standard Registry and the Verra Registry
The observer partner:
International Emissions Trading Association
The following Multilateral Development Banks:
European Bank for Reconstruction and Development, Asian Development Bank, African Development Bank, Interamerican Development Bank
The following Exchanges and Market Makers:
CBL, Singapore EX, Intercontinental, TMX, AirCarbon, ClimateTrade, Open Earth Foundation, Climate Ledger Initiative, Climate Chain Coalition, Temasek, GGGI, among others
Invitation to Collaborate
Invitation to Collaborate
The Carbon Markets and Innovation Team of the World Bank is continuing to support the effort to provide open-source infrastructure for climate market activities.
The World Bank is currently conducting the third and final phase of the testing and simulation with the Chia blockchain platform to run the Climate Warehouse on an interoperable, public, and permissionless blockchain. The collaboration with Chia Network is based on the principles of non-exclusiveness and open sourced public goods, bear no costs or intellectual property rights from the World Bank, and aims to promote interoperability. The World Bank conducted a technical assessment with a consortium of experts to discuss and review the Chia White Paper to determine whether and how Chia blockchain meets the requirements of the Climate Warehouse. Please find here the latest version of the Chia White Paper, which incorporates the feedback received during the technical review. In previous simulation phases, the Climate Warehouse was tested on private Ethereum, Hyperledger, and blockchain as a service with Kaleido.
The World Bank recognizes the rapid technological innovation in this space and the emergence of new platforms and will continue to assess the opportunities of using emerging technologies and platforms to support transparency, reduce transaction costs and maintain integrity of climate markets. The opportunities include support developing an end-to-end ecosystem that encompasses digital MRV at project/program level and relevant protocols; real time data flow through dMRV to the national MRV and registry systems and finally connectivity with the Climate Warehouse or any similar.
Any interested stakeholders with well-developed white paper(s) and implementation models that supports above mentioned objectives and are open to collaborate through a non-exclusive, no-fee arrangement, using an open-source platform with low environmental impact that promotes functionality, interoperability, sustainability and inclusiveness of carbon registries and climate markets are invited to reach out at gtorrasvives@worldbank.org.
Climate Warehouse Simulation 1
Simulation I - Connecting Climate Market Systems
The Paris Agreement introduced a bottom-up approach for addressing climate change by enabling countries to pledge individual commitments through nationally determined contributions (NDCs). Furthermore, Article 6 of the Paris Agreement recognizes that Parties may engage in bilateral cooperative approaches, including through the use of internationally transferred mitigation outcomes (ITMOs), to achieve their NDCs. In the first phase, the project identified potential prerequisites and requirements of Article 6.2 and conducted a pilot simulation of a prototype to test blockchain's utility as the underpinning platform technology to connect heterogeneous registries to track units and avoid double counting issues across those registries.
Webinar: Emerging Digital Technologies for Post-2020 Climate Markets
Climate Warehouse Simulation 2
Simulation II – Connecting Climate Market Systems
The second phase of the Climate Warehouse prototype development, which built on lessons learned from the simulation phase I, focused on testing the meta-data layer infrastructure with updated data fields. One of new features of the second phase prototype is the provision of an auxiliary application which mimics the minimum functions of a registry and thereby enables participation by country participants that currently do not have a registry. The second simulation involved broader participation, establishing 16 registry nodes and over 20 observer nodes.
Climate Warehouse Simulation 3
Simulation III – Connecting Climate Market Systems
The third phase of the Climate Warehouse prototype development, which builds on the lessons learned and findings from Simulation II, aims to test the Climate Warehouse on an opensource, interoperable and permissionless public blockchain platform, and develop a minimum viable product to operationalize the Climate Warehouse consistent with the recommendations from the 6-month consultation on the governance and financing model of the Climate Warehouse that was completed in February 2022. The consultation was co-convened by the International Emissions Trading Association, the Government of Singapore and the World Bank.