Crypto bubble: The hype machine behind a $70,000 carbon credit

UK-based cryptocurrency venture Save Planet Earth has convinced investors it can make them rich and fix the climate, but its tree-planting vision is a long way from reality

A computer circuit board (Photo: Harland Quarrington/Crown Copyright)

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When a carbon credit representing a single tonne of CO2 sold as an NFT for an eye-watering $70,000 at auction, carbon market experts were bewildered.

The credit was generated in Indonesia from the Rimba Raya reserve, one of the world’s largest initiatives to prevent emissions by protecting tropical peat swamp forests.

At the time, millions of credits from the same project were trading on the market for less than $20 each. In the first half of 2021, the price of a forest carbon offset averaged just $4.73/t. Why would anyone pay such a huge premium?

To find answers, Climate Home News dived into a community of cryptocurrency investors, connecting on messaging apps Telegram and Discord. Members were buzzing about the prospects of Save Planet Earth (SPE), the UK-based cryptocurrency venture behind the auction.

Since November 2021, SPE has sold 1,000 limited edition carbon credits as NFTs, from credits certified by market standard Verra, for an average price of $1,770. The aim? To raise funds to plant billions of trees that will “significantly change the Earth’s landscape” and store carbon that can be sold as carbon credits.

Central to SPE’s investment case is a claim to have government contracts to plant more than a billion trees in Pakistan, Sri Lanka and the Maldives. An investigation by Climate Home, drawing on interviews with government officials and experts in those countries, suggests this claim is vastly inflated. While SPE’s founder has been striving to make his vision a reality, it is far from a done deal.

SPE was established in April 2021 by 41-year-old Imran Ali, a project manager from the northern British city of Bradford, who previously worked in the waste and renewable energy sectors.

The company is part of a recent boom in cryptocurrency initiatives to overhaul carbon trading. These involve taking carbon credits out of the existing market and putting them on a blockchain where they can be bought with cryptocurrency, allowing traders to speculate on the price of a tonne of carbon. Growing demand for offsets is expected to push up prices.

“We are trying to create a clean market for carbon credits… make it easy for people to obtain,” Ali told Climate Home in a phone interview from Pakistan-controlled Kashmir, where he said he was visiting tree nurseries.

Ali described himself as “an environmentalist” and a father concerned about his daughter’s future – “not a crypto person”. The buzz around cryptocurrencies provided him with a vehicle to fund carbon saving projects and raise awareness about the climate crisis, he explained. “So far it’s working.”

SPE says it has attracted more than 80,000 investors. While Climate Home could not verify the figure, supporters of the venture exchange hundreds of messages every day on its Telegram channel. Ali said SPE was in talks with fossil fuel and mining companies interested in using its carbon credits to offset their emissions.

What is a cryptocurrency? 

Cryptocurrencies are an alternative way to make payments. The technology behind it allows virtual money to be sent directly to others without using a centralised system, bypassing governments and financial watchdogs.

What is blockchain? 

Each transaction of crypto assets is registered and verified on a blockchain, a computer-based system that uses digital keys to prove to the network who owns what. This makes blockchain networks transparent and difficult to cheat.

Doesn’t blockchain use a huge amount of energy ? 

Not necessarily. Blockchains used to support cryptocurrencies like Bitcoin are extremely energy-intensive. That’s because “mining” Bitcoin requires each node on the system to solve complex cryptographic puzzle to prevent hacking.

It’s this security design that is energy-intensive. New generations of blockchain use a different security test that uses just 0.1% of the energy, explained Johannes Sedlmeir, who researches electricity use in blockchain technology at German research centre FIM. Blockchain applications for global carbon accounting are being explored.

The international community of investors backing SPE coordinate on Telegram to generate hype around the company, sharing memes and motivational chats with newcomers.

“I HAVE NEVER BEEN SO PUMPED IN MY LIFE,” Rob, known to some investors as SPE’s co-founder, wrote in June about the company’s prospects.

Every day, a “Save Planet Earth helper” account shares a “to-do list” for investors to keep SPE trending on crypto currency trading platforms and social media. Tasks include visiting SPE’s web pages to boost its search ranking on Google and upvoting comments on Reddit.

Any critical messages are quickly challenged, with administrators urging contributors to keep a “positive vibe”.

One particularly active investor who goes by the pseudonym of “Cryptist” is referred to as “SPE’s hype hero” for sharing ecstatic voice messages.

Ali, who is regularly called “a legend”, uses these channels to provide updates to his backers.

“Super stoked for Imran’s update from Pakistan. So much work happening out there […] Project is still ploughing ahead from a fundamentals standpoint, the potential here is mind blowing,” Neil, of Canada, told the group earlier this month.

A message shared by Rob on SPE’s official Telegram channel in June 2021

“SPE is a diamond in the rough,” Adam, a firefighter from Southampton, UK, told Climate Home, comparing it favourably to the rest of the “greed-based” crypto world. By investing in SPE, Adam said he was “doing [his] bit” to solve the climate crisis. He hoped to use SPE’s future carbon credits to offset his family’s carbon footprint.

“I talk about the environment more than I have ever done with my friends, with my children,” he said.

Climate Home spoke to half a dozen SPE investors. Nearly all of them had previously invested in cryptocurrency. None knew much about the carbon market.

They trusted Ali to generate carbon credits that would increase in value and make them money. For most, saving the planet was secondary.

One of the few women active in SPE’s investor community, Hannah, of the UK, said she started buying cryptocurrencies to make some extra cash but invested in SPE to support climate action. “I think SPE is a really great investment because carbon credits are going to [become] mandatory,” she told Climate Home.

In marketing material for investors, Save Planet Earth cites analysis by the OECD which suggests that a carbon price of $147 a tonne is needed by 2030 to cut global emissions to net zero by 2050. “This is an ever-growing market that will be worth trillions of dollars over the next decade,” it wrote.

In practice, carbon pricing is not the only tool of climate policy. While analysts expect the voluntary carbon market to grow, Bloomberg New Energy Finance forecasts a much lower price of $11/t in 2030 – unless the quality criteria are tightly restricted.

SPE’s ambition doesn’t stop at carbon credits. The company says it aims to be “self-sufficient” and is working on developing its own renewable-powered blockchain, an app to monitor its afforestation projects and a carbon credit exchange where assets can only be purchased with SPE’s own cryptocurrency.

Investors that spoke to Climate Home praised the company’s transparency, leadership and qualifications.

On Telegram, SPE boasted about the team’s “several PhDs, MBAs and carbon fund managers” which it said made it “the most qualified climate science team in crypto with decades of experience in the environmental sector”.

But those named as “the core team” on SPE’s website act as advisors or contractors to the company and aren’t involved in its day to day running.

Product manager Sajid Salih, of Sri Lanka, told Climate Home earlier this month he hadn’t been in touch with the core “in a while” and was unable to provide information about the structure of the company.

Ali told Climate Home over the phone SPE was run by volunteers, including developers, “who are passionate about the environment”. In a later email signed by Ali and partly attributed to an unnamed volunteer, SPE insisted it had “a proper team comprising of carbon, technology, forestry, renewable energy, and crypto experts”, but that the company’s structure was “confidential”.

“SPE is doing really well and what it has achieved in a short time is immense, while also launching additional environmental projects. Something must be going right if that’s the case,” it said in an email.

Nine months after its launch, SPE said it had contracts to plant 1.1bn trees: one billion trees in Pakistan – a tenth of the country’s national target – 100 million trees in Sri Lanka and one million in the Maldives. Ali wrote on SPE’s official Telegram channel this month that the Pakistani government had “already given us the green light to carry on with our 1 billion tree planting initiative”. These boasts were, at best, premature.

Pakistan’s climate minister Malik Amin Aslam told Climate Home in an email he had never heard of SPE and was “quite surprised” by its claim. Hassan Ali Sukhera, national project director for the country’s flagship “ten billion tree tsunami”, said he had met with SPE but no agreement had been signed.

In a follow-up email, Ali changed his story. He said officials at the tree tsunami initiative and local authorities in Kashmir had “no objections” to the project and there was “no need for any agreement with the climate change ministry”. He said SPE did not have permission to generate carbon credits on public land in Pakistan but agreements had been reached with private landowners, which he would not disclose.

In fact, while SPE says it has planted 25,000-27,000 trees to date, none have been used to generate carbon credits. “We just do it to build partnerships and trust,” Ali said.

In the Maldives, SPE signed an MoU with the Maldives Integrated Tourism Development Corporation (MITDC), a government-owned enterprise focused on growing the tourism industry. This was done without the involvement or knowledge of the environment ministry. The deal didn’t include any provisions for generating carbon credits.

Mohamed Nasheed, Maldives’ former president and a long standing climate advocate, told Climate Home that planting one million trees in the Maldives was a “huge” target. The small island state is 99% ocean. Land for tree-planting is scarce.

“The Maldives want to plant trees and create opportunities to do so. But we would like credible people to come and do credible things,” Nasheed told Climate Home.

In Sri Lanka, the director of the Central Environmental Authority Kosala Welikannage wrote a letter in May, seen by Climate Home, introducing SPE to six tea plantations. But Welikannage told Climate Home that while the agency had supported SPE in planting some trees on Earth Day, it was no longer in contact with the initiative.

Ali said he had “enough leads” in Sri Lanka to meet the 100m tree target by planting fruit trees such as jackfruit, mangos, durians and avocados, on private tea plantations, which would allow SPE to issue carbon credits. The company said it was “actively seeking planting locations”.

The choice of fruit trees raised an eyebrow for Meredith Martins, assistant professor at the North Carolina State University, who has studied agroforestry systems in Sri Lanka. They are not the best option for storing carbon and while they can be good for communities, she said they needed to be “intensively managed”.

Ali said local people were being asked to monitor planting sites and that its community management plan was “classified” and that information will be made public “when necessary”.

For Adriana Vidal, senior forest policy officer with IUCN and chair of Global Partnership on Forest and Landscape Restoration, the information provided by SPE “is not enough to ensure the environmental integrity of these projects”.

“If you want to sell carbon credits you have to make sure that they are grounded in reality,” Vidal said. That requires clear agreements with stakeholders, land owners and authorities. “It’s not really serious if you don’t have this information in place.”

When Climate Home put it to Ali that he was misleading investors, he replied that SPE was “in its early stages” and that the pandemic had made the work “really difficult”. It was “a huge undertaking” but he insisted SPE “will achieve everything that we said we want to achieve” and “is being regarded as a serious environmental outfit” by those it has struck agreements with.

SPE’s business model presented to investors in marketing material (Source: Save Planet Earth)

SPE is one of a flurry of crypto ventures to have seized on surging demand for carbon offsets. Toucan, a nonprofit crypto initiative based in Switzerland, says its technology has allowed more than 18 million tonnes of carbon offsets to be tied to digital cryptocurrency tokens.

Supporters say this will make the carbon market more transparent, verifiable and easier to access for individuals and companies seeking to offset their emissions. Trading carbon credits the traditional way requires an account with a dedicated registry, putting it out of the reach of small buyers.

Carbon market experts are open to the idea in principle, sceptical in practice. Many are growing concerned about a proliferation of poor quality digital credits on the market.

“The tokenisation of carbon credits should not come at the expense of skimping on environmental integrity,” said Ingo Puhl, co-founder of carbon offset provider South Pole.

A key concern is that by putting credits on a blockchain, it removes it from the control of the carbon standard that issued it. This “opens the door for possible misuse,” Puhl said.

Standard Verra has distanced itself from the trend of tokenising its credits, warning that once they are traded on a blockchain, it can no longer vouch for their environmental benefits.

Comment: Why I refuse to collude with polluters in the carbon offsetting lie

The use of carbon credits to offset emissions from burning fossil fuels is controversial, regardless of how transactions are carried out. There is a long history of forest carbon projects not delivering the claimed climate benefits – and a certification process to try and address these flaws.

Trading carbon credits on a blockchain does not make them any better for the climate, argued Gilles Dufrasne, policy officer at Carbon Market Watch. “It’s just the same thing re-packaged” or worse a “greenwashing” machine to give “a crypto shine to poor quality credits”.

Owen Hewlett, chief technical officer at Gold Standard and co-founder of the Climate Ledger Initiative, a platform to bring together the climate and technology communities, was more optimistic about the technology’s potential.

Carbon market incumbents have plenty of ideas on how to use blockchain to advance climate action and democratise finance, Hewlett said, but crypto entrepreneurs were not listening to the old hands.

“It seems more about catching the cryptocurrency bubble than using that technology to do good. And that would be a missed opportunity.”

Investigative journalism takes time and expertise. Climate Home’s mission is to produce original journalism that informs and inspires action to tackle the global climate crisis. With your support, we can dig deeper. Please consider a contribution to our work.

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