Building an End-to-End Digital Ecosystem for Carbon Markets

Ecosystem. Post-2020 markets under the Paris Agreement will be built using a bottom-up approach, as each party to the Agreement must track greenhouse gas (GHG) emissions reductions (or removals) achieved, and has considerable leeway to determine how this will be done. 

Carbon markets are facing a future with increased complexity and diversity of approaches to reporting and verification of GHG emissions inventories and mitigation outcomes. Against this backdrop, there is an opportunity to underpin and streamline post-2020 carbon markets with digital technologies. Opportunities to improve efficiency and transparency, while reducing the generation and transaction costs of carbon assets, exist in both the upstream and downstream processes of carbon markets.

Collaborations:

• Digital For Climate (D4C). The D4C work program is a collaboration with EBRD, UNDP, UNFCCC,  and WB that aims to coordinate respective workflows and create a modular end-to-end digital ecosystem for the carbon market. Partners include the European Space Agency (ESA) and the International Emissions Trading Association (IETA). 

• The World Bank together with the Government of Singapore and the International Emissions Trading Association (IETA) launched the Climate Action Data Trust in December 2022 (for more details, please check the official site).

• The Climate Warehouse program partnered with Chia Network to prototype and test the metadata layer (Climate Action Data Trust) during Simulation III (for more details, please check the Simulation III page).

• The Climate Warehouse program of the World Bank supports the entire ecosystem to develop digital solutions in the international carbon markets. Enabling the industry to build on top of the Climate Action Data Trust across multiple blockchains will enhance the transparency and integrity required to scale the financing through this market. To this end, the Climate Warehouse program has a collaboration with Chainlink Labs to prototype and pilot interoperability mechanisms to catalyze adoption and enable the scale-up of market infrastructure.
  For more information on interoperability layers for carbon markets, please check: https://chain.link/use-cases/climate-markets 
  For more information and industry comments on requirements, please contact: Enterprise@chainlinklabs.com                                                                                     

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 the integrity of climate markets. The opportunities include support for developing an end-to-end ecosystem that encompasses digital MRV at the project/program level and relevant protocols; real-time data flow through dMRV to the registry systems and finally connectivity with the Climate Action Data Trust or another infrastructure element. 

While the Climate Warehouse (CW) is open to collaborate through a non-exclusive, no-fee arrangement, using open-source platforms with low environmental impact that promote functionality, interoperability, sustainability, and inclusiveness, the CW is currently focused on delivering the minimum viable products of critical applications and will initiate further collaboration when the current commitments have been delivered. For further inquiries, please contact: climatewarehouse@worldbank.org.