By Chris Lang
At the UN climate negotiations, COP26, held in Glasgow in November 2021, a group of 10 multilateral development banks put out an “MDB Joint Climate Statement”. The statement tells us that MDBs are “delivering” and “raising climate ambition”. Obviously, there’s no mention of the farce of the World Bank’s Forest Carbon Partnership Facility, or the recently approved a US$40 million deal with the Republic of Congo most of which will benefit logging and palm oil companies.
World Bank “missing in action” on the climate crisis
The Financial Times reported that in Glasgow the World Bank had pushed to shorten and weaken the MDB’s joint statment. Predictably enough, the statement doesn’t include any specific targets, or deadlines.
Speaking at a meeting organised by the Financial Times Al Gore blamed the World Bank President, David Malpass, “the guy who was appointed by the previous US president” for the World Bank’s weak response to the climate crisis. “The World Bank has been missing in action,” Gore said.
Gore is correct when he says that Malpass “doesn’t seem to care at all about climate”, but Gore’s proposed solution is “new leadership” for the World Bank. Gore overlooks the World Bank’s long history of failure to address the climate crisis.
Since the Paris Agreement, the World Bank has spent more than US$12 billion on direct fossil fuel project financing. That’s excluding the World Bank Group’s links to fossil fuel projects via financial intermediaries.
While continuing to fund fossil fuels, the World Bank has heavily promoted carbon markets:
The World Bank Group (WBG) believes that the use of markets will have an important role to play in the successful, cost-effective implementation of the Paris Agreement by reducing costs and facilitating greater resource mobilization.
One of the Bank’s initiatives to promote carbon markets is the Climate Warehouse.
The World Bank’s Climate Warehouse
The World Bank’s Climate Warehouse aims to “design connected infrastructure for tracking and recording of MOs”. MOs refers to Mitigation Outcomes (which were previously known as carbon offsets). The Climate Warehouse is looking into how different registries of carbon offsets can be connected, “in order to increase transparency and trust”.
Currently, according to Environmental Defense Fund, there are more than 50 carbon markets operating in different jurisdictions around the world.
These markets are not linked. Chandra Shekhar Sinha, an adviser at the World Bank, told GreenBiz that, “With such diverse and separated systems, it is difficult to have a clear picture of the overall market activity across countries and institutions.”
The Bank is proposing connecting registries in a “simple, decentralised way, that is consistent with the bottom up ethos of the Paris Agreement”. According to a video on the Bank’s website, “The World Bank’s Climate Warehouse initiative is testing how blockchain technology may provide a solution.”
The Climate Warehouse will use blockchain technology to connect systems and store information on carbon offsets and projects.
Enter Chia Network
During COP26 in Glasgow, a small US-based crypto company called Chia Network Inc. announced a partnership with the World Bank’s Climate Warehouse.
Chia’s Chief Operating Officer and President, Gene Hoffman, describes the deal as follows:
Chia is developing the prototype for the Climate Warehouse as convened by the World Bank Group. We are working with and welcoming partners to join us and the World Bank. This is a non-exclusive, open source and no cost solution that we are developing for the public good.
The Climate Warehouse will be a public good data layer built on blockchain technology to facilitate the transparent sharing and reporting of climate project information and their issuances. Once operational, the Climate Warehouse will reflect the data from connected independent standard registry systems and governmental systems to enable the traceability of project and unit information.
A few days later, Costa Rica and Chia announced that they had signed a Memorandum of Understanding to use Chia’s technical services in support of Costa Rica’s National Climate Change Metrics System (SINAMECC), the country’s official platform to coordinate climate information. SINAMECC was set up with the support of the World Bank’s Partnership for Market Readiness.
SINAMECC, according to a 2020 report from the World Bank, “was also a crucial step towards Costa Rica’s ambition of having a robust domestic carbon market (or an Offsetting Mechanism, as it was later transformed to be)”.
Chia was created by Bram Cohen, a computer programmer, best known for creating the file sharing BitTorrent protocol in the early 2000s.
Chia’s blockchain is based on “Proof of Space and Time”, which the company claims “has a significantly reduced carbon footprint compared to ‘Proof of Work,’ used by all other crypto networks”.
Instead of relying on “mining” where warehouses of energy-intensive computers operate 24-hours-a-day, Chia’s “farmers” use computer storage space. High-performance computers are not needed and the drives used on the Chia network consume far less energy.
Chia eats hard drives
That sounds good (or better than Proof of Work, at least), but there’s a catch. Here’s a description of how Chia’s Proof of Space works:
When a drive is first brought online, the Chia software will “plot” it by filling the unused space with cryptographic data. Then, when the blockchain broadcasts a challenge, the farmer’s drives will be scanned and whoever has a hash that’s the closest match will be rewarded with Chia.
The more storage you have on the farm, the more likely you are to match a hash and receive Chia in return.
Chia was blamed for a shortage of hard drives in 2021. The pressure was relieved when the price of Chia fell. It peaked at more than US$1,600 in May 2021, since when it has dropped to just over US$80.
At the current price, to make about US$100 per month, you’ll need about 150 TB hard drive storage, according to the Chia Calculator.
A marriage made in hell
While the World Bank’s partnership with Chia Network might help international carbon markets to function, it will do nothing to address the problems of carbon offsetting.
Putting carbon offsets on the blockchain will do nothing to address the insanity of carbon offsetting projects such as the Bisasar Road rubbish dump in Durban, South Africa – which was funded by the World Bank. Neither will it address the issue of carbon offsets generated from REDD projects that have failed to reduce deforestation, or that consist of logging operations on the territory of Indigenous Peoples living in voluntary isolation.
Carbon markets are a dangerous distraction from the reality that the only way of addressing the climate crisis is to stop burning fossil fuels. We need to leave fossil fuels in the ground.
Instead, the World Bank and Chia are helping Big Polluters to buy carbon offsets and pretend to be doing something about the climate crisis, while in reality continuing business as usual.