J.P. Morgan tests carbon credit tokenisation

J.P. Morgan is working on a blockchain technology that would tokenise global carbon credits, believing it could solve issues around transparency and standardisation.

Kinexys is J.P. Morgan's blockchain unit, and it's working with S&P Global Commodity Insights, EcoRegistry and the International Carbon Registry (ICR) to test the viability of such a technology.

EcoRegistry and the International Carbon Registry have successfully completed testing on their respective registry solutions, while S&P Global Commodity Insights will start exploratory testing with its Environmental Registry, J.P. Morgan explained.

"Global carbon markets face challenges including inefficiencies and a lack of standardisation, transparency and market fragmentation. A single, tokenised carbon ecosystem in which credits are portable between sellers and buyers supporting seamless means of settlement could contribute to addressing these barriers," J.P. Morgan said.

J.P. Morgan Payments head of natural resource advisory Alastair Northway said the voluntary carbon market is ripe for innovation.

"Tokenisation could support development of a globally interoperable system that adds confidence into the integrity of the underlying infrastructure. This technology could support greater information and price transparency, which could ultimately lead to greater liquidity in the market," he said.

Meantime, Kinexys Digital Assets head of product Keerthi Moudgal said: "We are excited to continue engaging with carbon market participants to build and implement new blockchain-based technology for this ecosystem, as ongoing engagement is central to our product development."

"We look forward to seeing the promise of tokenisation come to fruition and the transformation of the voluntary carbon market from the ground-up."