Sunny Lu presents VeChain's blockchain solution for carbon credits, developed with DNV GL and BYD. The system tokenizes carbon credits on the VeChain Thor blockchain using IoT data and smart contracts, letting companies and individuals buy verified credits to offset emissions.
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And I wanna show you the next use case, which is, I really like it, it's my favorite project. It's an open ecosystem with one single business consensus, saving the planet. It's a carbon emission reduction initiative, okay? So the carbon emission reduction or carbon footprint is one of the difficult topics right now in the world, honestly. Why? Because it's very difficult to measure. Actually, you do lots of activities every day, but it's hard to measure. That's the first thing. And second thing is hard to quantify. That means it's hard to incentive people are really doing that.
Mm-hm.
And for enterprise point of view, they say, I wanna save the planet, what they do? Right now they send a bunch of people in the middle of the desert, plant some trees, took some photos and publish an article to say, oh, we are saving the planet and nothing more, right?
Yeah.
So we offer a solution with DNV GL again because they are CER, Carbon Emission Reduction standard for UN, for United Nations. So what we do is I kind of have a video to show you, I'm sure you will like it.
The way we live has a direct impact on the Earth's environment. Do you drive a fossil fuel vehicle or an electric one? Do you eat with disposable silverware or reusable? Do you take a taxi to the mall or use a shared bike? Do you carry your groceries with a newly bought plastic bag or bring an environmentally So you got lots of different activities.
So what we need to do is digitalize using a digital format to describe your different activities.
VeChain encourages emission-reducing behaviors by allocating carbon credits to program participants. Imagine the owner of an electric vehicle connected to a network, or Internet of Vehicles. Power consumption is uploaded automatically, along with mileage and traffic data, and stored on the VeChain Thor blockchain. A smart contract is then generated, and the carbon emission savings of the vehicle are converted to the equivalent in carbon credits, which are rewarded to the owner. The calculation process is verified by third-party authorities such as the NBGL. Participants can collect carbon credits to redeem discounts or buy products and services from partners of the VeChain Carbon Ecological Platform. This emission reduction-based reward mechanism is great for enterprises looking to enhance their customer relationship management programs and create new channels driving business value. Corporate social responsibility is a key pillar to any business's strategy for success. With this program, we can craft a low-carbon ecosystem together. Chain's carbon credit incentive system prompts both businesses and individuals to reduce carbon emissions. Every action is recorded on the VeChain blockchain, powering a new paradigm of low-carbon environmental protection and prosperity for our current Future planets. Fiji is empowering low carbon emission to form a healthier global carbon ecosystem.
That's beautiful.
That's awesome.
Beautiful, right? Now everybody is pushing us to launch this like everywhere in Japan, in Geneva, Italy, in France, like everywhere.
These carbon credits are tokenized. In a smart contract.
In a smart contract. So, actually, okay, I'm gonna explain here. There are 3 types of roles in this ecosystem, okay? One is we call technical service provider. VeChain is providing technical, and DNV GL is providing technical, but in a different way. So, basically the format or the formular inside of the smart contract is provided by DNV GL. So they're based on activities, for example, you're driving an electricity vehicle, right? So you gotta have mileage you're driving, battery conditions, even the type of electricity, is it water plant or coming from fire plant, it's different. So these kind of the metrics will help the DMVGL to calculate how much carbon emission reduction you can contribute.
Do you measure also the level of CO2 in different parts?
Yeah, they have standards. Yeah, they have standards because how they calculate— well, I'm not expert, but I know a little bit— is based on the average CO2 footprint in this area and comparing the EV, and they can calculate how much you save instead of driving a gas car, buy EV, that kind of way. Or like disposable garbage, if you— there is like IoT garbage, IoT-equipped garbage device, if you put in the right way you can get incentive by doing that, it's also saving the planet.
Can I ask a question?
Yes.
So my question is about the economics. What's the economic model of this carbon credit? So who pays for those credits if they are like auto-generated?
That's a good one, okay. So I just mentioned about the service provider, right? Okay, the second part is here, we call carbon credits generator. BYD is the first one to use, so they actually opened up the car system. BYD is like a Chinese Tesla, not that fancy. Not that fancy, not that expensive, but it's very large. Only say very large. They are starting to sell electricity bars in North Europe actually right now. So they provide the platform to allow you install application and collect the car computer, the data from car computer and upload to the smart contract on the blockchain. And who pay for that is here, is carbon credit supporter. For example— So Any companies. If you wanted to say, I really wanted to save the planet or support the environmental protection activities, how are you going to do? You say, I provide whatever the services or products in exchange about the credits.
Or you can sponsor everyone just by buying those tokens.
Yeah, so for them, you can just say, for example, the milk company, the Brightfood here, That's a bright food. The milk company say, I only support whoever owns the carbon credits, and you can conduct like a 5 RMB or $1 or something to buy this milk. Before, they have a marketing budget, right? Right now they are kind of like killing 2 birds with one stone. They use this, they allocate this marketing budget to these carbon credits. So they are attracting traffic. They are attracting traffic from like BYD users, which they're good. And also they believe the user who willing to protect the environment is a customer I want to have. It's like high-end customer. So is this essentially a futurist approach to solving this problem? No, not really centralized. Think about that. Who is generating the token?
The credit company.
No, it's the user generating, you know, user is doing the activity and the technical provider to describe the activity and DMVGO as the third-party certifier to use a public formula to generate this token. So as long as you have more activity, can be measured, can be quantified, and more carbon credits can be generated. So it's totally decentralized way to do this. And for the supporter, like the carbon credit supporter, you can check the entire market, you can decide, you don't have to buy them all. You don't have to like spend unlimited resource on that. You can just say, from one enterprise, I wanted to spend $1 million this year on this. As long as I claim that, as long as I redeem $1 million credits, I'm fine. And I can show to the government, like, I'm— or the public, I'm really fulfill my social responsibility, right? So what we do actually is just try to build up more generator. That means we use a different IoT methodology to describe the different activities. And find more CER supporters, like we're selling this idea to them. Right, like okay, you, let's say even an individual, you wanted to contribute like $1,000 for a year, or enterprise want to contribute $1 million a year, never mind. As long as you can do that, as long as you can provide a service, products, even directly buying from some market to incentive people to do that. Why not?
