Today, the Celo community is stepping up in the fight against climate change by competing for the $100M carbon removal challenge by XPRIZE. To achieve this ambitious goal, we are launching the Climate Collective, a community driven effort to fight climate change by tokenizing rainforests and other carbon sequestering assets. The collective, which features ten companies at launch including Curve Labs, Kolektivo, Moss, and Regen Network, will propose that over the next 4 years, these tokenized trees be added to the Celo Reserve so that Celo stablecoins can be backed in part by rainforests, which are essential in the fight against climate change.
Sequestering carbon and reducing greenhouse gases are the fastest ways we can help avoid the colossal effects of climate change with the IPCC predicting that we need to remove 10 gigatonnes of CO2 per year by 2050 to keep temperatures from rising 2C. This makes Elon Musk’s $100M carbon removal XPRIZE competition, the largest in XPRIZE’s history, incredibly important in helping us fight climate change.
We see this as an opportunity to have a massively positive impact on the world by sequestering carbon through preservation and mass planting of trees. We strongly believe we have a serious shot at reaching this goal.
Inspired by the concept of “natural capital backed currency” in Charles Eisenstein’s Sacred Economics, we are proposing that over the next 4 years, up to 40% of the Celo reserve (which backs the cUSD and cEUR stablecoins) transition to tokenized rainforest and other carbon sequestering assets. Natural capital backed currencies work by backing money with things we want to see more of in the world. Existing and newly planted rainforest are a compelling choice because of their inherent value and impact on helping to mitigate climate change.
Crucially, backing money with rainforest is significantly more capital efficient than seeking donations to plant rainforest. While these efforts are commendable, we believe that it is significantly harder to raise and deploy billions of dollars for planting trees than to encourage people to transact with a currency that is backed by natural capital.
So how do the numbers look? The Celo reserve is currently around $850M in size. 40% of that would allow the protocol to buy and own $340M worth of newly planted rainforest to back the Celo Dollar and Celo Euro stablecoins. A plot of rainforest the size of Lebanon costs 25M dollars in the Amazon, which means that at today’s reserve size, 40% of the Celo reserve could be backed by roughly 135M large rainforest trees.
These trees would sequester roughly 43 megatons of CO2 per year, which would amount to 0.43% of the IPCC goal. Furthermore, if Celo Dollar and Celo Euro circulation were to grow to the size of USDC, we would reach 16% of the IPCC goal.
This all might sound far fetched but the reality is that we’ve already started. The Celo community decided to allocate 0.5% of the Celo reserve to voluntary carbon credits and initiated the purchase of tokenized Moss.Earth carbon credits that are protecting numerous forests. There are also existing efforts in the Celo community to plant and reforest deforested land. Moreover, the Celo network is already carbon negative — it buys carbon offset credits from Project Wren automatically with block rewards and overcompensates thereby its CO2 emissions.
Photo by Atharva Tulsi on Unsplash
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