Ripple: partnership for a carbon credit marketplace on blockchain

ripple carbon credits

Yesterday Ripple announced a new partnership to develop a blockchain-based carbon credit marketplace.  

The partnership involves Climate Collective and Thallo, and aims to create a Web3-based marketplace for carbon credit offsets that will use XRP Ledger to increase transparency and efficiency.

Ripple and the Web3 marketplace for carbon credits

In many countries around the world, companies that emit too much CO2 into the atmosphere have long been forced to buy carbon credits from other companies that instead produce energy without emitting any. 

A carbon credit is a generic term that effectively represents the right to emit one ton of carbon dioxide (CO2), or an equivalent amount of other greenhouse gases (tCO2e), into the atmosphere. 

Over time, a veritable giant market has developed on a global scale for these carbon credits, and the goal of Thallo, Climate Collective and Ripple is to create a transparent one based on blockchain. 

The initiative’s founding partners also include Undo, VenTree Innovations, InPlanet, BioFix and TrendCO2e. There are 23 partners in total, and they also include Carbon Business Council, Crypto Climate Accord and Chainlink, among others. 

Thallo is a company that is using blockchain to try to democratize the carbon credit market by facilitating direct matching between buyers and sellers. 

Its goal is to solve some of the problems of traditional carbon credit markets, and in particular that of liquidity and the opacity of price data, by facilitating direct matching between high-quality buyers and sellers. 

Voluntary carbon credit markets in 2021 reached a total market capitalization of nearly $2 billion for the first time, but this could rise to $150 billion in the next eight years. In fact, many private companies and organizations large and small have committed to meeting decidedly ambitious climate goals, and carbon credits are expected to be in high demand to help meet these goals.

Comments from project partners

Thallo co-founder Joseph Hargreaves said: 

“I’m honoured that some of the most trusted organisations in web3 and climate, such as Ripple and Climate Collective, have chosen us as a key partner in tokenized carbon credits. Together, we will help make the voluntary carbon market more effective, helping funds go toward high quality projects and making it easier for companies to achieve their sustainability goals in a transparent and verifiable way.”

Senior Vice President and Social Impact and Sustainability at Ripple, Ken Weber, added: 

“As the demand for carbon credits intensifies, blockchain and crypto technology is uniquely positioned to help support market growth by solving persistent challenges around transparency, traceability and verification. In line with Ripple’s commitment to more efficient and scalable carbon markets, the talented team behind Thallo is building a marketplace that will bring more liquidity, greater access to pricing and market data, and an improved certification process to an often opaque, slow and siloed market. By leveraging Ripple’s enterprise readiness and carbon neutral XRPL’s reliability at scale, Thallo is democratizing access to verified carbon credits for both institutional and retail investors to help offset their carbon footprints in a way that satisfies their key stakeholders.”

The XRP token and listing on Binance

Today XRP’s market value is up nearly 6%, but had fallen in recent days. It has now recovered its level of 22 September, at about $0.47. 

However, perhaps besides the news of the partnership with Thallo and Climate Collective, another piece of news may have had an impact, namely that Binance has added just XRP to its Dual Investment products. 

Binance’s Dual Investments provide access to “Buy Low” and “Sell High” products, that is, with price selected at a future date. 

Sell High allows selling in BUSD of BTC, ETH, SOL, MATIC, ADA, BNB, DOT, BCH, AVAX, FTM, ALGO, NEAR, ATOM, as well as XRP, while Buy Low allows buying in BUSD and USDT of BTC, ETH, SOL, MATIC, ADA, BNB, DOT, BCH, AVAX, FTM, ALGO, NEAR, ATOM, and XRP. 

In late 2020, several exchanges had been forced to delist XRP because of the SEC’s lawsuit against Ripple, but over the months there was a realization that the court case was not making concrete progress and was in fact bogged down. 

At that point, they started to list XRP again, and since it is still one of the top ten cryptocurrencies in the world by market capitalization they also started using it with new products such as Binance’s Dual Investments. 

So if between late 2020 and early 2021 the crypto market was reducing the opportunities for buying and selling XRP, resulting in declining trading volumes, during 2022 XRP is slowly catching up with the lost volumes, so much so that it has now surpassed those of BNB, ADA, and SOL, for example. 

There was a time when it was even second behind only Bitcoin in terms of market capitalization, even ahead of Ethereum. But now it has slipped to sixth position (fourth if stablecoins are excluded), but with volumes definitely on the rise. Excluding stablecoins, in terms of volume right now it is in third place overall, behind only BTC and ETH. In fourth place, there is SOL with just over a third of XRP’s volumes. 

So over the course of 2022, XRP is reclaiming its role as a third wheel, alongside Bitcoin and Ethereum, despite having lost it to both BNB, Solana and Cardano last year. 

It is worth noting that the SEC case against Ripple is not yet over, and in theory could still hold some bad news. 

The key issue is whether XRP should be considered a security, like stocks, or a commodity, like BTC or ETH, and its future may depend on this, especially if the SEC and the court opt for the former option. For now, it seems to be prevailing to consider it the utility token of Ripple’s services, but this is still only an unofficially confirmed hypothesis for now.

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