Published on November 24th, 2018 |
by Michael Barnard
November 24th, 2018 by Michael Barnard
Along with our regular daily clean tech news coverage, CleanTechnica also produces in-depth reports on various aspects of clean energy and clean transport. One of the emerging technologies we cover that isn’t directly a clean tech innovation is blockchain, which promises to be a catalyst for innovation in the green economy in the very near future. Blockchain is probably most widely known to the public as “having something to do with cryptocurrency and Bitcoin, right?,” which is partially correct, but the technology itself has a wide range of applications, some of which will be crucial in the fields of distributed renewable energy, grid management and energy storage, and smart contracts, among others.
The full report Blockchain – An Innovation Enabler for Clean Technology, which was published in July, is a deep dive into blockchain and its potential, and we will be posting more excerpts from the report over the coming weeks. (Read the last installment here.)
Nori, a company which recently emerged from stealth, is creating the Nori token. It’s a cryptocurrency token that represents a ton of CO2 removed from the atmosphere and sequestered in one of a number of potential ways. This isn’t a cap-and-trade or carbon-tax system, but a market mechanism which values removed tons of CO2. Like carbon offset programs for fliers and drivers, it allows individuals and businesses to offset their CO2 emissions with guaranteed removal of CO2 from the atmosphere.
The principals both have experience in this space. Christophe Jospe worked under Dr. Klaus Lackner at Arizona State University on air carbon capture solutions. Paul Gambill created an early iteration of this carbon market specific to regenerative agriculture at a hackathon in early 2017 and started a community group focused on carbon removal.
They have a methodology and approach to validating sequestration which is based on rigorous academic, technical, and experiential knowledge, and Lackner is a formal advisor to Nori.
Full disclosure: I was involved with Jospe in his early days of determining how he would establish his entrepreneurial path prior to the blockchain pivot, and continue to communicate with Jospe and Gambill. I have no financial stake in Nori of any kind.
The following Q&A has been lightly edited.
What’s Nori’s status today? How close to a white paper and a minimum viable product are you?
Nori has 8 full-time team members and is aiming launch a working prototype by the end of 2018. Right now we are focusing on building a working blockchain dapp that enables buyers to purchase carbon removal certificates from suppliers with NORI tokens that we will be creating. The other side of that is working with potential suppliers (i.e. farmers) and our data aggregator partners to ensure there’s adequate inventory in the marketplace when we launch.
Details around our go-to-market strategy are in our white paper. The paper has been shared with the attendees of Reversapalooza on April 26 and 27 of 2018 and will be made public thereafter.
What is the governance model you have put in place to ensure your offering is not misused or abused?
The key question around carbon removal is how do we verify that the CO2 gets removed and stays where it’s been put. Each different methodology has to have its own rules and parameters defining how that CO2 is measured. We’re following open-source software standards to have public conversations around how these are defined in our Github.
On the cryptocurrency side of things, we’re taking two approaches:
- Ensure that we are able to get NORI tokens to as many different owners as possible.
- Locking up founder token grants on a 4-year vesting schedule with a one year cliff, akin to how many startups treat stock grants.
What is the incentive model you have put in place to balance value across the set of blockchain participants?
Our incentive model is straightforward. Entities who can remove carbon dioxide from the atmosphere and sell carbon removal certificates are paid with NORI tokens. Verifiers will be paid both by suppliers of carbon removal certificates and by buyers of CRCs through our marketplace.
How are you hedging against significant reductions in cryptocurrency value as seen in Q1 2018?
Our strategy for this is to get a working marketplace operational as quickly as possible so that the value of the NORI token becomes more closely tied to the value of real-world carbon removal as opposed to how closely it’s tied to the value of bitcoin. We are working to build up both sides of our two-sided marketplace so that there is existing supply and demand when we launch.
Is proof-of-stake an end-state consensus approach or an intermediary step like proof-of- work, and if so, what consensus approaches do you foresee dominating?
We are very excited about proof-of-stake coming to the Ethereum blockchain. We have confidence in the community to implement it well, and if it needs improvements, adjust on the fly. We’re especially excited about PoS because of its potential for reducing the overall environmental impact and energy usage that is required to operate proof of work blockchains.
What key metrics or key performance indicators do you consider critical for your offering and business model?
The metrics that we’ll judge our success on are straightforward coming out of our market:
- Number of tonnes of CO2 paid to be removed
- Unique number of CRC buyers, and the change over time
- Unique number of CRC suppliers, and the change over time
- Frequency of buyers returning for additional purchases
- Frequency of suppliers returning to sell additional CRCs.
For now, we are focused primarily on increasing the number of potential suppliers.
As an early mover, what one piece of advice would you give to people consider entering the cleantech blockchain space in the coming year?
Talk to your customers and network participants early and often to get their feedback incorporated into your product design as early as possible.
Stay tuned for more excerpts from Blockchain – An Innovation Enabler for Clean Technology, or view the summary and request the full report at https://products.cleantechnica.com/reports/
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