Verra, the largest voluntary-carbon-credit registry, said that retiring credits to make a cryptocurrency instrument (token, or coin) does not “[consume] the credit’s environmental benefit,” as is retiring credits is “widely understood” to do.
For traditional uses of carbon credits, retirement is a full consumption of the credit. Verra’s credits are called Verified Carbon Units, or VCUs. The VCUs are assigned (“issued”) to projects that consume carbon or avoid emissions. For example, someone could plant a forest, which would consume CO2. That could earn a VCU. Or, a certified wind project would replace the need to burn gas or coal, thus avoiding emissions.
For a company who does emit carbon and wants to offset their carbon footprint, they can substitute someone else’s negative-carbon project by buying and retiring a Verra credit. By doing so, they reward the developer of the carbon-reducing project.
As we explain here, one type of cryptocurrency called Base Carbon Tonne (BCT), created by non-profit Toucan, is created by attaching a carbon-offset credit. To make a BCT, you retire a Verra VCU. However, instead of the credit being dead and gone, it lives on as BCT. Suppose the cost of credits increases in the future; in theory, so would the value of the previously created BCT. That can be confusing, because the usefulness of the credits is supposed to be over. Verra took objection.
But that’s probably not Verra’s only complaint.
Verra also said that creating crypto tokens is done at your own risk, and they did not comment on the legal or environmental worthiness of such an activity.