Nori is a Blockchain enabled CO2 marketplace. There are two approaches to tackle climate change. The first is the method proposed by the Green New Deal that seeks large scale Government reinvestment into reducing CO2 emission and other environmentally sustainable initiatives. The second is a market-based solution whereas the Federal Government provides tax incentives for investors or firms to pay for carbon removal activities.
Nori is a Blockchain marketplace for carbon-credits. An investor or firm who is looking to offset the specific amount of carbon can do that by purchasing an offsetting activity using the Nori marketplace. The activity might be the planting of a tree, the installation of solar panels, the use of biomass, etc.
The marketplace aggregates trading information taking place on its platform to arrive at eliminating a specific amount of CO2 from the air.
The Economics of Market-based Solutions
The economics of Nori is worth evaluating. In the FAQs, Nori describes a situation where an individual might purchase a Nori token for the price of $1 then redeem that token when the price goes up to $5, effectively increasing their carbon purchasing power.
A supplier will complete a carbon removal action then upload its completion to the platform. Nori verifies that activity before a buyer can purchase the removal certificate, then redeem that certificate for a tax incentive or communicate the environmental impact of a specific project.
The transactions between a supplier of carbon removal and a buyer are straightforward.
How would speculators intermediate these transactions?
For equity markets, the role of speculation provides liquidity to the marketplace, investors, and firms. Would speculation need to monitor for carbon removal?
Hypothetically a speculator could purchase removal credits from a supplier then hold those credits. A buyer might pay a premium for those certificates in the future.
The role of speculation in a carbon marketplace could intermediate volume. Perhaps there are certain times in the year when carbon removals activities occur frequently, but there are different times of the year when buyers need removal credits.
A challenge could arise if too much speculation occurs on the platform. Carbon removal certificates should not have too much of a premium.