A Canadian company plans to sell crypto tokens to offset carbon emissions that it claims will be created in partnership with First Nations.
As the climate crisis worsens, carbon emitters aren’t planning to cut their production. Instead, they’re looking for opportunities to offset it, and carbon credits—tradable units of carbon emissions—offer a low-maintenance way to balance their carbon accounting while continuing business as usual. Carbon credits are typically produced by reducing or preventing emissions in one sector or business. For example, if a new technology reduces energy used or emissions produced in agriculture or oil and gas refinement, the saved emissions can be calculated and turned into a carbon credit. The business can then sell those "reductions" to companies who emit a lot, and who can use the reductions to shrink their net emissions on paper.
But the voluntary carbon market is mostly unregulated, and no international guidelines exist for the creation and validity of carbon credits. This means individual firms get to define their own carbon credits. Blockchain technology and NFTs add another wrinkle to this scenario.
Calgary company Delta CleanTech, a carbon-capture tech wing of natural gas purification company HTC Extraction Systems, wants to meet this new demand, which is why it's launching a new project: carbon credits on the blockchain that it claims are produced in collaboration with First Nations communities in Canada.
But no official First Nations partnerships are confirmed, and experts worry that these types of voluntary carbon credits—blockchain or not—will further enable rather than mitigate the climate crisis.
Delta CleanTech is calling these “First Nations ESG tokens.” ESG stands for environmental, social, and corporate governance, and is a corporate responsibility movement that over the past 17 years has ballooned into an estimated $30 trillion investment industry. The firm intends to mint its tokens on a blockchain for trade and sale in the voluntary carbon credit market. And it has big expectations: A PR email sent to Motherboard indicated the intent to sell the first tokens to “5 or 6 recognised Fortune 500 companies, like a Disney or a Google."
Lionel Kambeitz, founder of Delta CleanTech and its carbon credit validation tech company Carbon RX, has been involved in the carbon credit market since 2006. Kambeitz is also chairman of the KF Group of companies, which presides over 70,000 acres of farmland in Western Canada. Kambeitz Farms' website notes that the family got its first 160 acres under the Homestead Act of Canada.
He said that Delta wants to partner with First Nations via Carbon RX to develop carbon credits from each nation’s activities, including agricultural, forestry, or fossil fuel industry endeavors. Currently, there are no international rules governing the creation and validation of voluntary market carbon credits, and each company can create their own.
“We identify the carbon credits that would be possible to be harvested on their lands and we sign a joint venture with them, and at that point the carbon credits that are harvested on their lands, they’re first of all originated by our organization, and they’re validated,” said Kambeitz. “We get these credits certified and we then enter them onto a digital database or a blockchain to be able to have security and credibility. That becomes a tradable carbon token.”
Kambeitz said that Carbon RX and First Nations partners would both own carbon credit tokens, and that Carbon RX would sell these credits to Fortune 500 companies “who are after a complete ESG Carbon Solution. Environmental with the carbon credits, Social with the Social License of the First Nations, and Governance utilizing a digital database and Governance as prescribed by the First Nations.”
The websites for Delta CleanTech and Carbon RX don’t detail these tokens or processes for making them, and Kambeitz didn’t respond to inquiries about what blockchain would be used or by what process the tokens would be minted.
Kambeitz said the blockchain offers a more secure and less costly method of recording transactions. One of the key pieces, he said, is “to be able to help First Nations create economic sovereignty and independence, and help First Nations create their contribution to the environment.” Kambeitz said once they’re created, each nation could determine whether they want to sell or keep the tokens. “If the First Nations wish to sell the tokens when they’re created, we will give them an opportunity to do that,” said Kambeitz, and that “80 percent plus” of the net revenues for the tokens will be “awarded” to First Nations.
When asked which First Nations the initiative had partnered with, Kambeitz cited only Reginald Bellerose, former chief of Muskowekwan First Nation in Saskatchewan. Bellerose collaborated on land leases and development with Lionel and the Kambeitz family for a decade while he was chief. Now, he will serve as chairman of “a First Nations executive council” for Carbon RX, and said they intend to create a council of advisors and elders that “will be populated in the coming while.”
“You have the Western science, you have the PhDs, you have the business, so we want to balance that with the First Nations worldview,” Bellerose said in an interview.
Bellerose said Muskowekwan is “definitely interested” in participating, but said the main opportunity was to take the program across the country. “The goal would be to work to secure as much First Nations land as possible, and then incorporate First Nations worldview through the elders,” said Bellerose. The First Nations councils would carry Carbon RX’s messaging to communities, while the business side, run by Kambeitz, would court emitters to buy their tokens. Bellerose said benefits for the communities would vary based on industry, but that given there is never enough revenue for nations from their own projects, the agreements would “positively impact First Nations.”
Bellerose could not confirm any community partnerships, and Kambeitz said he could not disclose specifics.
Still, Kambeitz added that he was “pleased with the quality of the First Nations leadership... This really is resonating with First Nations because they want to fully contribute to the climate change solution.”
Researchers and policy analysts who study carbon markets and the climate crisis that Motherboard spoke to say carbon credits in general are complex and range in value depending on how they’re created, but that this particular endeavor seems dubious.
Polly Hemming, an advisor at an independent Australian public policy think tank who specializes in carbon markets and greenwashing, called the project “a hot mess” in an email, citing the amount of jargon on Delta’s website among all of its various projects.
“It’s borderline nonsensical,” wrote Hemming. “If you can’t clearly describe the climate benefits of your project, then it’s likely you’re hiding something. This ‘initiative’ is greenwash, topped with more greenwash, garnished with blockchain.”
Kambeitz doesn’t see it that way, citing a “carbon currency” as a necessary step towards more sustainability.
“If we look at where we are today to where we want to be tomorrow in a renewable world, we need a bridging solution and one of the bridging solutions is a carbon currency,” said Kambeitz in response to greenwashing criticisms. “These are the incentives we need. You can’t tax your way out of this with a carbon tax.”
Lauren Gifford, a postdoctoral researcher at University of Arizona who studies how companies financialize the environment as a means of governing it, first noticed the creation of blockchain-linked carbon credits in 2016, a trend that is growing more popular with carbon credit NFT projects like SavePlanetEarth, which purports to create credits by tree planting but has come under fire for its carbon accounting.
“All of this stuff is people who are seeking to accumulate wealth through this process,” said Gifford, adding that blockchain doesn’t clear up the fundamental issue of unregulated carbon markets with unclear or variable standards and protocols. “People don’t even know what’s going on.”
According to Eriel Tchekwie Deranger, executive director of Indigenous Climate Action and member of the Athabasca Chipewyan First Nation, carbon markets are part of a continuing history of exploiting Indigenous communities in Canada.
“Canada has a deep history of not wanting to share royalties or direct revenues with Indigenous communities with respect to resources,” Deranger said. “Carbon markets have become one of those things.”
However, she said that she's skeptical of the many projects in Canada—for example, those run by the government and resource extraction companies—that tout First Nations involvement without deeply involving those communities in decision-making.
"It's just a redwashing tactic that allows it to look like they're the ones that are doing something good for the communities when the government has failed and we all applaud them as if that's a good thing but the reality is, why are we not pushing back on the government and saying why are you still allowing this to happen?" she said.
Deranger cautioned that carbon markets under the United Nations’ forestry protection and emissions reduction program REDD+ in countries in the global south amounted to Indigenous displacement from their land rather than protection or financial benefit. She worried that like that program, carbon credits that promise economic prosperity are doing so under coercive terms, since communities that have been abandoned and impoverished by the Canadian state aren’t in a position to give “good consent.”
“It’s the same tactic they came into our communities with for treaty negotiations, for oil and gas extraction, for deforestation, promising trinkets and baubles and employment that has not really resulted in a lot,” said Deranger. “We need to do our homework, and we need to not accept face value financial promises from people that have no connection to our cultures, our lands or territories, and ways of life.”
Deranger added that she reserved no judgment for communities that participate in the carbon market. “Any chief or nation that signs onto these agreements are not sellouts or idiots,” she said. “They are people that are trying to do what’s best for their communities because they see the suffering, they see the poverty, and the government and society have turned a blind eye to that.”