We all know the debate about whether mining is a sin to mother nature and if it is inevitable for blockchain technologies to achieve carbon neutrality. There is most likely no stronger movement in western society than the advocacy for taking climate change seriously and acting accordingly. While the Netherlands is mostly engaged in researching hydrogen as an alternative energy source, Germany decided to shut down its nuclear power plants even in the face of a severe energy crisis. This underlines how important this topic is.

How is Ripple planning to become carbon-neutral and how does the XRP Ledger contribute to the fact?

Ripple is pledging $100 million to reach that goal

The agenda of reaching carbon neutrality in 2030 was announced in late 2020, but it was earlier this year when Ripple started to outline the strategy. Pledging $100 million to reach its ambitious goals the company is not only looking to strengthen its own efforts but also investing in fintechs that trying to make a difference as well as carbon removal companies.

Another goal is to tokenize carbon credits since there is a global effort in making these credits the industry standard, meaning that every major company has to offset carbon. There is also a secondary market that involves trading carbon credits which is also facing several challenges.

It was in December last year when Ripple announced a partnership with Xange that is providing such a secondary market. The company is looking forward to developing its own custom solution on top of the XRP Ledger with the primary focus to ship the finalized product to the African market.

How do NFTs fit in the picture?

Non-fungible tokens often require smart contracts which is not per se the strength of XRP. There have been several proposals in the past on how to issue NFTs on the XRP Ledger. In March 2022 a new proposal was made that is known as XLS-20. It aims to add native NFT support making the tokens indivisible, unique, and unlike already existing solutions not available for payments.

This requires putting in additional work and extending the XRPL with new transaction and data types as well as libraries. Aside from the speculation that NFTs are about to be traded in the same fashion as on Ethereum – which they could – it seems that Ripple has bigger plans using this technology.

Carbon credits are not as reliable in terms of duplicating them as many NGOs and authorities wish them to be. Duplicating credits is one of the biggest challenges the market is facing currently since it allows to offsets carbon emissions twice with the same certificate. This happens often between more than one company, meaning that two more companies are offsetting using the same certificate. While many crypto investors are mainly associating NFTs with digital collectibles they are in fact unique certificates that could extend to the carbon offset market. It remains to be seen if NFTs will provide a viable solution for the problem and which blockchain will win the race to offer a solution to the global market.