The California Energy Commission, the state’s primary energy policy and planning agency, is funding an experimental market for carbon-credit trading on a public blockchain. 

Under a plan announced Friday, demo digital tokens will be given to participating businesses that cut their carbon footprint by powering electric van sharing, said Eduardo Javier Muñoz, CEO of EVShare, a startup that’s now involved in the pilot through electric vehicle company Green Commuter. (EVShare is not a contractor with the Commission and the pilot is led by smart energy nonprofit Energy Coalition). If the pilot goes into production, the credits can be used to pay for electricity consumption, rides and services in the future.

Mobility-related transactions will be recorded on the RSK blockchain, a smart contract-oriented platform that is similar to Ethereum but runs on top of the Bitcoin network.  Transactions sent to a microgrid–a separate system from the city’s power grid–are being recorded by Community Electricity on the Energy Web Foundation’s blockchain.

The market is part of a $20 million initiative that will track data related to solar panels, energy storage, electric vehicles and charging infrastructure in Bassett, an unincorporated community in Los Angeles County. The commission’s previously disclosed $9 million grant will cover nearly half the cost; Google, the University of California at Los Angeles and others are covering the remaining $11 million, according to EVShare.

The project aims to digitize carbon credit reporting, create opportunities for businesses to redeem credits and make electric vanpooling cheaper for Bassett residents, Muñoz said. 

“Today, carbon credit trading is not digitized,” he said. “It’s a very unconventional market … Now it will be easier to hold [credits] and trade them.” 

It is rare for enterprise blockchain projects to use public networks, which are auditable by and open to all comers, instead of a private ledger restricted to authorized participants. Rarer still are enterprise experiments tied to Bitcoin; Ethereum has been the platform of choice for most corporates venturing into open-network territory.

Green mind

The Bassett initiative is the also latest attempt to streamline trading processes for carbon credits using blockchain record-keeping. In July, the InterWork Alliance announced that it was working on blockchain tools to prevent double-spending of carbon credits.

The RSK blockchain will also register transactions between vehicles and solar panels, batteries and chargers. Records of their usage will be stored on-chain with the help of RIF, an identity product developed by RSK Labs, the startup that created the chain. The electric vans will be operated by Green Commuter.

Phase 1 of the pilot included research and development, business collaboration and participation from the Bassett community. Phase 2, which the companies also announced Friday, will connect 50 houses to the solar grid over the course of two years, Muñoz said. 

Carbon credits permit companies to emit a certain amount of carbon dioxide and other greenhouse gases. Companies with unneeded carbon credits can sell them to other firms that emit more.

EVShare aims to help 1,000 cities transition to a sustainable sharing economy over the next decade. The firm plans to connect solar home-energy systems with shared electric vans operated by Green Commuter. Excess energy is sold to a microgrid or used by households.

UPDATE (July 7, 12:44 UTC): Because of inaccurate information initially provided by EVShare, an earlier version of this article incorrectly said the startup is leading the pilot; the nonprofit The Energy Coalition is, both organizations said.

The article has also been updated to clarify that the carbon credits are not actually redeemable, just demos; that the pilot is connected to a microgrid, not the city’s power grid; that transactions on the microgrid will be recorded on a separate blockchain developed by Energy Web Foundation; and that Green Commuter is a contractor with the energy commission, not EVShare or RSK.

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