The Carbon Offset Market: First Things First - Jamil Benabdallah, Founder of The Zero Fund - E108

On this week’s episode of The Encrypted Economy, we have founder of The Zero Fund, Jamil Benabdallah. We dive into the developing market of regenerative finance and try to understand how blockchain can positively impact the space.  Be sure to subscribe to The Encrypted Economy for more insight into innovative technologies frameworks in web 3.0.   

Topics Covered:
· 3:10    Jamil’s Background and Origin of The Zero Fund
· 9:10    Defining the Negative Carbon Project 
· 27:30    What is the Incentive for Farmers?
· 30:00    Exploring Certification Standards
· 46:00    Building Out the Ecosystem the Right Way
· 49:00    How do Distributed Ledger Technologies Facilitate Data
Sharing?
· 54:00     Does Secondary Trading Complicate the Narrative?
· 56:30     Closing Thoughts
 
Resource List:
·       Jamil’s LinkedIn
·       The Zero Fund
·       Beyond the Buzz: What Can Blockchain Do for Carbon Markets?
·       Negative Carbon Project
·       Carbon Credit
·       Sargassum
·       CSDR Policy
·       Verra
·       Gold
 
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Transcript

Eric: [00:00:00] Everybody knows, I think, who listens to the podcast that I have a fascination with markets and market players and how technological innovation impacts markets. Shocking. I know the vast majority of my career I spent doing just that in the us reg regulated markets also internationally. So go figure.

Markets can be inefficient and those inefficiencies are often exacerbated by scaling too soon. Speculation can be a positive force in attracting attention capital, but also if it's too soon, it can lead to problems. It can discredit a market; it can result in breakdowns and efficiencies and discourage participants.

This is the case, I think, in the markets of DCI and Reg Regenerative finance which I have started to explore a bit in my podcasts. Both find themselves in positions to leverage encryption and blockchain technologies, but at this stage, [00:01:00] blockchain technologies may be an important component of what they're doing, but far from the primary story.

So this podcast will be interesting to understand a developing market, the dynamic that impacts economic incentivization and making markets work for regenerative finance, and to understand how blockchain technologies can have a positive impact. It also highlights how markets and opportunities that leverage blockchain technologies have to manage narrative despite the benefits when facing off against traditional industries and businesses.

There is often the need to manage that narrative around blockchain technologies because it could be, As a negative, by the same token, this is the cycle of innovation. So love it or leave it, this is a great podcast with Jamil. If you like it, please share it. If you have comments on my recent focus on regenerative finance, Desi, or deep dives on regulation impact and digital assets, let me know.

And with that, I bring you Jamil Benabdallah, founder of Zero Fund. [00:02:00] 

Welcome to the Encrypted Economy, a podcast exploring the business laws, regulation, security, and technologies relating to digital assets and data. I am Eric Hess, founder of Hess Legal Counsel and your host. Join me on this journey exploring the reach of these transformative technologies.

So today, really excited to have Jamil Benabdallah founder of Zero Fund on the podcast. Welcome, Jamil. 

Jamil: Thank you Eric. Well, thanks a lot for your invitation. I'm very glad to be with you today. 

Eric: same here. So today we're gonna talk about Zero Fund and y basically Zero Fund based in France, but obviously has a much broader application than just France.

Is really delving deep into the use cases and building the infrastructure and ecosystem for, whether we call it negative carbon [00:03:00] project or carbon offsets or carbon credits. We're gonna get into that. Jamil's gonna get into that. I'm not gonna get into that. But so that's a topic of today's podcast.

So Jamil let's start off a little bit with what, with your story, your personal background, what drew you to start the Zero Fund? Why specifically sustainability, and then also why blockchain? . 

Jamil: Thank you Eric. So yes, why sustainability? Why blockchain? And maybe I will change the word blockchain by innovation.

Why sustainability and innovation. In fact I can say that this project, the zero fund, it's a little bit the conclusion of the last 20 years.. So quite a long time now since I start working as a consultant in sustainability, so I was ma so I was making sustainability strategies a lot for public stakeholders, but also for p private stakeholders working with also large [00:04:00] institution like the word bank, like the EU Commission, and trying to make how can I say, to make, to go on this transition to do a low carbon economy for all these stakeholders.

And in the same time along the, this professional life, I have also, if I can say it like that, a civil society life when I have also my NGO for more than 10 years now, and which is also in the topic of sustain. And also the topic of innovation because a lot of time we have to work with NGOs on the local field and try to provide them the best digitalization tools.

I think that sometimes it can be strange, but in fact a lot of these stakeholders don't have digitalizations tools and that's really hinder, that really hinder them to go on further their projects. So in fact, this project is really the work on providing the [00:05:00] best innovative solution for sustainability and in our case, sustainability.

It's a low carbon transition of the economy. 

Eric: Excellent. And then we get to Zero Fund, which seems like a natural outgrowth, but what was the origin of Zero Fund and what drew you to starting it up? 

Jamil: Yeah, it's exactly what I said before. It's starting from a bottom up approach, working on NGOs on the field, esp, especially on natural parks, trying to find them to trying to find solution to subsidize their projects, to inci, to incentivize them, to create new projects, to work with local community, with farmers, with other stake stakeholders that are along this natural park and trying to find true carbon credits.

One of the way to finance this transition for all these stakeholders. So first we start from the NGOs on the [00:06:00] field, how we can help them, support them to create these low carbon projects. How we can help them to subsidize them through carbon credits. Then provide them the best digitalization tools to do that.

How they're going to digitalize the carbon credits, how they're going to commercialize it, and then starting from that, how we are going to help the Carbon Bay buyers to purchase it easily, but also to propose solution to the clients, to the providers, also to enter in this kind of NetZero supply chain that I'm sure we'll speak about a little bit later.

So, it was really the idea. Then after working with all these stakeholders, we discovered that also the public stakeholders wants to get involved. They want also to manage some networks with NGOs, with projects providers, with carbon buyers, as I want also to support this project. So we have also [00:07:00] added the public stakeholders there.

So it was really a bottom up approach that has created the Zero fund project. And the zero-fund solution. So, it's really starting from the ground for the real needs of the people. 

Eric: So you didn't, so in your case, it wasn't the situation where you said, I have an idea and let me go run with it. It was, you were consulting, you were engaging with the World Bank, the EU commission, NGOs, and along the way you started to see that there was a gap that, that z, that zero fund could potentially fill.

Is that being that correct? 

Jamil: Yes. Yes. That was a clear problem. , there was a clear gap When you are, let's say you're small project owner and you want to, for example, you are a farmer and you are working with other farmers and you want to enter in this transition towards a low carbon agriculture because it is really a need for the future.

And [00:08:00] then you are going to look for a certification scheme that can be very expensive. You have to gather with other stakeholders in order to get to that, so we have to give them the tools in order to do that. Then after you are going to need to sell your carbon credits so you can go to intermediaries, that will take 30%, 40% of the value of the project.

From the beginning. And that's, and here we are not speaking about the cost of certification, of the problem of the project. That can be also 20%. So, let's say that in the worst case, you will get 30 or 40% of the value of the project. At the end when it'll be solved, then you have another issue. You are just some farmers.

Your job is not to go to every big company and to say, hey, I have some carbon credits to sell. So in fact, yes, the problem was really real. It [00:09:00] was really daily problem and we were just thinking about how we can, how can we solve that? 

Eric: Excellent. So let's touch on something that I raised in the intro.

You framed the notion of a negative carbon project. And maybe if you could help differentiate how a negative carbon project has different economics or different mechanics than a carbon offset or a carbon credit. Like how do you, how would somebody differentiate between those? Or are there elements in each?

Is it more blended? Is it, 

Jamil: okay, so if I say it in a very simple way and try to answer to your question because it's a very wide question. In fact, so let's say that for example, we have the World Cup in Qatar in in last winter. And so, the organizers of the World Cup say it is a net zero [00:10:00] World Cup because they have purchase carbon credit.

But that doesn't mean at all that it is a negative carbon event. So in fact, it is a positive carbon event that has purchased, and in that case, very low quality, if I may say it, and at a very low price, carbon credits in order to communicate and to say that it is a net zero event. So, in fact, there is not a real link between carbon credits or negative carbon projects.

It's just that negative carbon projects. Some of them in some conditions, if there are certified, can sell carbon credits in order to be subsidized and in order to help their business model. If you are speaking about agriculture, you can make the switch to a low transi, to a low carbon agriculture, for example, but it has a cost.

It'll not [00:11:00] lower your productivity, but it'll increase the cost of the product. So you can sell carbon credits in order to remain competitive and to be incentivized to make this change. So in fab, the carbon of offset are coming, but not all the time. That's why it's, it is very wide question that are coming for negative carbon projects because sometimes you can have only carbon, avoid, avoid projects.

So that means that you said, okay, I have put some solar panels, let's give this example. And it's not sometimes the best one. I have put some solar panels and now before I was using normal energy gas and other things, or even the worst-case fuel to heat the home and et cetera. Now with solar panels, so I am avoiding extensive CO2 every year and I'm going to sell them.

In order to subsidize to finance this change that I have been made by purchasing the [00:12:00] solar panel. So here we are not speaking about a negative carbon project that is creating carbon offsets because there is no sequestration and after you can study, okay? But is the, are the solar panels really net zero?

Or what was the carbon footprint for building them? What will be the carbon footprint for recycling them if we find a good solution to that? So it's really a very large question, but the idea is that with negative carbon projects, you can after create carbon credits that can be sold. 

Eric: All right. Something I, I came across recently there is a company starting off take oil wells that are basically abandoned or low operating.

They're continuing to operate because of various tug tax subsidies or what have you, but it actually is a, they're flaring natural gas. It's, they're producing it at an inefficient cost, but it's still, [00:13:00] or they're abandoned and they're still emitting. So what they do is they raise money and then they basically shut down the well, and then they take the carbon credit for all the oil that is trapped in the what, what are your thoughts on, on, on that?

Is that the, is the oil on the ground effectively a negative carbon project? Because if you basically shut down that completely, that oil can never come out of the ground. But is that the same kind of, is that a negative carbon project or is that. Or is there an element of negative carbon, but not completely, like I just, just curious as to how you would frame it.

I think. 

Jamil: it's quite similar to something like avoiding, so it's more like something I'm avoiding to pollute or to emit greenhouses gas. But for me it's not a negative carbon project because a negative carbon project anyway, you must sequestrate. That's my point of view and it's [00:14:00] shared by a lot of people and by experts.

So after of course all these thematic, there are a lot of discussions and everything, but for me it's really the fact of seing the carbon that is going to make it a negative project in the sense that at the end of the project you have se castrated more than you have emitted. So, it's a negative project.

Negative carbon projects, but by saying, I'm avoiding polluting for me, you are not making a carbon negative project. 

Eric: Interesting. I'll ask you another hypothetical, 

Jamil: if I may say after, it's also very complicated to pay people to do, to not do something that maybe was not profitable anyway. It's always that people are trying to find all kind of subsidies, it's like with the forest, I keep my forest, [00:15:00] so I want to sell carbon credit to be subsid to be subsidized, to keep the forest.

I don't think. 

Eric: there's yeah. Did, there's a, there's arguably a public good in each of those cases, but I guess your point is that. that shouldn't be valued as high as something that actually removes carbon. 

Jamil: Of course. 

Eric: From the atmosphere. 

Jamil: Exactly that. Yeah. 

Eric: Excellent. Let me ask another hypothetical.

Yes. Yeah. Hopefully that helps others understand. So, I had a client last year actually, it was a brief engagement, but they would operate fields of sargassum which are I guess I don't know if they're seaweed, but I'll say it's like it's algae, right?

 And basically sargassum. It can rise to the surface. When it's effectively, I don't know, in, in its early stages and it can absorb carbon and in the ocean, [00:16:00] it releases it in a way that is, beneficial to the ocean cuz it's slow release and it's part of the estuary and I guess it also feeds new sargassum, so there's an absorption component to it, almost like charged batteries.

Like the batteries are empty, they're floating to the top, they're getting charged, they're dropping to the bottom. Would that be a negative carbon project or would that just be a carbon offset? I guess it depends on how it's released in the ocean, right? No, I'm not making it easy for you. Jamil, I know.

I'm sorry. Yes, yes, exactly. That's my last hypothetical. That's my last hypothetical. I'm not, 

Jamil: No. You can go on after. Yeah. No, never. Hard questions are always really interesting question. No, for me it's a negative. I, okay. I say that I'm not an expert and I don't know totally the process, of course, but yes, I think we can categorize it as a negative carbon project because in fact it's sequestering carbon and after we have to be sure that the way it really is carbon, we won't have secondary [00:17:00] negative effect.

To the ocean or to the climate because sometimes after 10 years, after 20 years, many times humanity has said, okay, we made a mistake. In fact, we did not know exactly and it was a mistake. But as you described it, it is a negative carbon project. But after this negative carbon project, I suppose that they were able to mature the carbon that was se castrated and after they were looking for a solution to sell this carbon credit.

So now we come back to the first question. Yes, it, we are speaking about innovation and we are all loo, we are all looking for very innovative solution to sequester the carbon, to use it and to be sure that there won't be negative external. While doing that. So yes, you can have direct air carbon capture, you have, can have a lot of very interesting technologies.

And I think that it's also our duty to our, [00:18:00] with solution like ours, to try to finance the solutions to get them access to a market and to help them present it. But also on our side, we are trying to be sure that the work is really done and is really done in good condition of course, because that's what the procedure sorry, are also looking for.

In, in our prior podcast on this topic, we talked about the benefit of localized projects versus buying a chunk of the Amazonian rainforest that could be double counted and it's already there until somebody slash and burns it. And then what do you do? Even if they do, so there's obviously issues with just saying, choosing a wilderness area and saying, we’re gonna buy up that carbon offset, particularly if you, I guess it's beneficial if you also invest funds as a result of that to ensure the preservation and to try to [00:19:00] maximize it.

But to simply saying, it's I think one example raised was JP Morgan bought this state park land Yes. That was already designated a state park land and said we bought it. And so great. It was a revenue generator for I guess the state park system and it made, allowed JP Morgan as saying one snap that hey, recovered.

But actually there was no negative, there was no improvement to their carbon foot, to the overall carbon footprint. It was just tied into something that was an already in existence. Speaking about the local projects what are you seeing in your business? With regards to local projects, I know that's a and maybe as part of this too, just sketch out the types of projects specifically that you're working with.

Maybe some examples. 

Yes, of course. So it's also linked with this bottom [00:20:00] up approach because we really wanted to size local projects because we have also the request for the companies or from the public stakeholders because there is also this idea and it that if we are going to support this kind of how will focus now because there is all, we have also forestry project, we have different kind of projects, but let's focus on agriculture, regenerative agriculture projects because I think it is quite a good example because when you finance these kind of projects, you also finance climate adaptation.

because there is also this reality that the climate change is taking place. We are going to try to reduce as much as possible. We are of course trying on a smaller part because anyway, we were not able to see rate all the carbon we have first to reduce it and all the focus must be on the reduction of the carbon footprints.

Then after we can also sequestrate and we can [00:21:00] purchase carbon credits of a high quality. But the idea was also that these farmers, they are suffering. They're suffering because after 70 years, for example, or 80 years of very productive agriculture, the art is the earth is thyroid. We have to regenerate also the soils for agriculture and it has also a very big impact on climate change, on the drought.

That we are living. It's also because of the current situation of the soil that I use for agriculture. For example, when we are working right now with an agriculture project, we have seen a lot of co benefits that appear all the time. For example, you will have a better quality of the agriculture projects and that's also a co benefit for the health of the people that are consuming this product.

For example, with the soil, when you are going to let the soil how can [00:22:00] I say it? You are going to let the soil unfertilized of one year or two years like that, all the insect. All the microbes that are in the Earths that in the earth will regenerate because in fact, in a lot of time, a lot of time the earth is dead.

The soil is dead. So in fact you just have to put some fertilizers and all the products and all that. So a lot of time you have to make, for example, a kind of one part of your land is used a part of the year then it is led to rest. And then you are going to use another part of the land and you are going to let some residual organ organic residuals on the earth that will be absorbed by the earth, by the soils in order to regenerate and with the carbon credit.

And if we subsidize them, it won't be so much expensive in front of other agricultural projects made through [00:23:00] industrialist way. Then you have all the reduction of pesticide residues. that are also a problem for the health of the people living along the farm, but also for the mar, for the farmers have that have, who have a low life expectancy rate than other people because of the chemicals that are using every day in their agricultural work.

You are also increasing the farm autonomy, self-sufficiency, because you are going to provide other way of making agriculture that let that make them less dependent of inputs from the fertilizer company and from other providers. You are going to decrease the nitrogen fertilizer, which is also a health issue for the consumer and for the agriculture.

You are going to increase the biodiversity along the farms and this is also very important to fight and to mitigate the climate change, and [00:24:00] you are also going to increase the price of the farmers. Because they're making a virtuous agriculture and they are not the people who are responsible for this climate change.

Because agriculture is one of the main polluters. For example, you are, you have livestock, you are breeding livestock. You are going to give a certain kind of food, if I can say it like that, to the livestock. And this food must be made on your soil in your farm. So, there is no transport also. And this kind of herb of food is not go, is going to be able to lower the GII emissions, the met emissions of the animals when they are it when you are giving it to it.

So you are really making something that has a real effect on carbon sequestration, but also on the [00:25:00] adaptation to climate change. . So this is very important and you give them a look and you have this local impact ID that is wanted by everyone. And we will speak also about it a little bit when we speak about blockchain because behind the word local, there is the word trust.

Because it's near me. I can go, I can enter in contact, maybe some of this project, some of these products that are made in these farms will end at the market just close to me. So, you have the trust because it's something that is very close to you. And in the same way it, for the company, it's very important when they are communicating to the customers, of course, because there are more, no, they believe more the company, if they know where is the project and that the project can be checked.

And that is certified by local public authority if it's the case of a local project in France, and also for all the employees of your company. , [00:26:00] it makes a big change because you can really show the involvement. You can enter in contact with the farms. You can go make a visitor there. They are really open to that in our projects and like that, all the company, all the employees can see the effect of this of this, of the, of this policy, of this company's policies.

And one of the last thing is that more and more in the future e s G report of the companies and now you have the C S D R plus also policy that is becoming mandatory. All the companies will have to explain and to describe where they have purchased carbon credit. In which project for which amount.

And to be to be able after to say, okay, you are just purchasing $4, $3 carbon credits in some projects that are not really sure if I can say it like that. And that will be, that will make also a difference. So you have a lot of elements [00:27:00] that are going in this direction of supporting local projects.

And what is also, I'm sorry it was a long torque, but just to say your last point that is also very important is that when you are supporting local project, you are also supporting the appearance of new local projects. Because other farmers are looking at that and they're saying, okay, there is an opportunity here.

We can sell our carbon credits at a real price, at a good price. People are looking for quality, for local impact. So, I will also enter in this low carbon transition. 

Eric: Excellent. So the, talk to me a little bit about the econ economics of it from a farmer's perspective where, where are they seeing, prior to getting to the point where they're marketing it as an offset, what are the, some of the other ways that they're capturing some of the economics [00:28:00] from, transitioning their farm to, to carbon?

I think you raised the notion that it does create, there's a benefit within the community because the, because there's a tendency for people like certainly the farm to table or buying the farm produce, saying, or knowing that you can trust it. That could be basically, maybe that's the primary benefit or the primary way that they're recapturing is through better marketing.

I think you also mentioned how they could also save money on how they feed their animals by being smarter about how they're utilizing some of their, non-marketable product to go back into feeding their animals. What are some of the other ways that they capture the economics before they even go to trying to I, I guess sell it as in, into a carbon producer.

There is. 

Jamil: also a product that is linked with what I mentioned before, but with carbon avoidance because they're also purchasing, [00:29:00] for example, materials in order to lower their energy conception. And for example, you can say solar panels in some cases for example, that can be subsidized also by, by this kind of projects.

But I think you mentioned the main benefits because the main benefit is that they can be subsidized through selling carbon credits. That is the main benefits for them because their cost will increase during the first years when they're making this transition. So, in fact, this is the main advantage that we are giving to them.

It's really to subsidize this project. 

Eric: So we spent a little bit of time talking about how, how the projects that generate high quality. Not just carbon offsets, but negative carbon consumption or negative carbon effects. And now let's spend a [00:30:00] little time talking about, before we talk about the marketplace for it let's talk about the veracity of data in this marketplace.

We, in past podcasts we've talked a bit about Vera, we talked about gold. Maybe there's a few others that you might want to note just as but, and then there's the French approach as well. The government is involved. May maybe give us sort of a picture of the different standards, and maybe your thoughts on each.

not all of them, it's just the main ones. 

Jamil: Yes. I think it's a hot topic right now about the standards and about the certification standards. So of course you have other companies like Pure for example, which is which also has its certification system. These are private, let's say NGOs or private companies that the association that had the certification standards.

After you have many other [00:31:00] ones of course, and now you have also a lot of let's say medium sized projects that are trying to create the own certification system because we don't have to forget that it's also expensive. To go towards this private accreditation systems a lot of time and that people cannot afford projects, owners cannot afford to do that.

So they are trying to work on some ESO level that are already existing, adapting them to their situation. And what was interesting with all the last condo is that you have now a lot of companies that are how can I say it, calling the state to intervene. and to come with some certification that are backed by the state.

And in fact it's already the case in France because we have this low carbon label lab, BA carbon that is existing. We have not a lot of [00:32:00] methodologies like or like golds are just, there are less than 10 methodologies available. Available, sorry for the moment. But there will be more and more.

And yes, indeed the ID is that when the certification system is backed by the state, there is any way more trust that is created, even for the processor. We can see it as a positive things, maybe as a negative things, but we will see it as a positive thing because it's a very clear roadmap for the projects owners and it's a very clear roadmap for the project buyers.

Because you are going to be less and less criticized if you are purchasing carbon credits from the which are validated by the states. And this with the certification system that is given by the state. So for Earth, it's really a clear [00:33:00] advantage for the project that are when it's possible.

So let's say for the French projects, it's really an advantage if they have a Bel Ba carbon that is validated by the Ministry of Ecologic transition. 

Eric: And I, if you get the French state back standard, do does a project also use a private market standard as well? Avera or a Gold, or is it just like you wouldn't because you have your state standard?

If you go now on Golden, if. 

Jamil: you go on the registry, I think, I don't know if you will find one French project. 

Eric: So the ones that get it through the French government, they're like, we're good . Yes. 

Jamil: Some are using other lab. Does they have created on the model of the of no, of the French one? I'm not going to say that all the projects [00:34:00] in France are levelized with the with the lab, be, carbon let's say certification, but none are going to Vera and gold.

Very few. 

Eric: And so, w what do you think ultimately develops on this? Like I is the French approach? If you're trying to sell, and I guess it works really well if you have a localized market. But let's say that I am creating these negative carbon offsets in France, and I want to sell it to somebody in England.

, is somebody, is a, the marketplace in England going to appreciate the, is it LaBelle? Yes. LaBelle standard. Okay. I'm actually half ke quo, which I know doesn't count as France French, I used to speak French quite well, just horribly now. But [00:35:00] yeah. So how would that play to a potential buyer, the LaBelle certification?

Would it do, I, there's a bigger question as to on some level, if it even matters, right? Because meaning within France it matters, but unless it's, but if it's not, if it's being purchased from a country that doesn't know the LaBelle standard, then it's LaBelle or Vera or Gold. The point is that it's still being certified.

Yeah. Yes. Do you think it's do you think outside of France it's just another standard? Or do you think, obviously there's a, depends, but is there a recognition? Is there greater comfort taken for marketplaces outside of France? Has it not really been an issue? I'm just curious as to how it how, what the interplay is with a localized standard and how it relates to potentially an international market.

Probably more so in the countries around France. [00:36:00] 

Jamil: Yes. It's a very interesting question. In fact, our point of view is that you will have a. Let's say I, I cannot see the future, but let's say that during the next 10 years you will have a lot of local market, in fact, of a normal of carbon credits with the own certification system, with the trust that will be built with the support of public stakeholders or not, depending on the case.

So I'm not saying at all that it'll be only with public stakeholders and that yes, people in England will be able to purchase carbon credits from France, but they will try all, they will try most of the time to find solution in England. So in other country anyway, it is a global fight against climate change.

So we are not here to say you have to purchase for this country, on this country. The importance in the quality of the project, that is really clear. But the idea is that [00:37:00] if you want to have trust in the project, a lot of time it's localization counts. and how the certification made is already, is also very important.

And anyway, it's linked also with our product because we, in a lot of time we have a white label solution. So we provide to the people the possibility to create their own marketplaces. And that's what we do with public stakeholders, but also with private one, because they will be able to onboard the own projects they have and they will be able also to speak with the future per chasers and explain them how we, how it's working, the qu how, what is the quality of the project because, it's, you trust anyway is not given only by your technology.

Is given by the localization, by your contact, by the trust that you have with the people you are speaking with. So trust is not something only digital or that will be solved by a digitalization. [00:38:00] So I would so this is the idea behind, for me, if we said like a little parallel with blockchain, it'll be a decentralized market, but it'll be a decentralized market in all the different countries with their own markets that is there.

So it'll be very hard to say, okay, this is the price of a carbon credit. This is the value with the only one price for all the markets. Because you will have different kind of markets, you will have different kind of projects, you will have different costs for each of this project. So it'll be very hard to do it in that way.

So anyway, I think it's possible for a French to buy from a Spanish project that is certified locally if he knows the people. , if he has a contact with them, if he goes to the farm, if he has the good intermediary, maybe to explain that. But it'll work with them. It'll be hard for somebody, which is in Sweden to say to the French people this is the best project in Spain.

But the [00:39:00] certification, it's a local one and the people don't know about it because it's not a question that it's not the truth. It's because with all these articles in the newspapers and with all what is happening with greenwashing or even with Green Hushing, with the fact that companies are afraid to declare that they're making offsetting because they don't know, they don't have engineer to say that this is the good certification in in, in their team.

So in fact, the trust will go on from other reason. 

Eric: I think you're right. If you're buying, if your strategy is to buy up as much land in, in, or as much carbon offsets from Amazon and you're in the US or you're in Europe, there, there's a high probability that you're not spending the time to really understand what it is you're actually buying.

To your point, ultimately, it has to be much more than just pretty pi pretty pictures. There has to be, or even a [00:40:00] private markets certification, which, may be a good standard, but again it, does it stop with the Vera saying it's okay. Does that mean it's the gold standard or does that mean it's no, this is one thing and you still also need to do more.

I guess that's a question, like if you have Averys is Avera or Avera, if you have that certification. I mean it, I think what you're saying is there has to be more than just saying, oh, it has a various certification, so it's good, right? 

Jamil: Yes. It has to be more than that because you have also to see what is exactly the value of the project.

We talking about the core benefits, but also what is the price of the project? Because if you are making regenerative agriculture projects, I cannot see how you can sell a carbon credits less than, let's say I say the minimum price that I can imagine, less than 35, $40 [00:41:00] by tons of long number of co2, and you have a lot of projects that are at $15 or at $12, and here you have.

Okay. They find another way to do it. But you don't see exactly how then after, I'm not speaking specifically about Vera Gold or any standard, but sometimes there is also an, is an issue when you are the certification part and the seller part at the same time. Because at least, and I don't say that once again to say that France is the example.

There are also some issue in France. You wait a lot to be certified. It's like when you are working with the state you, you encounter all the time the same issues. But at least the state is not selling anything. They're just making the certification. And then after the audit is made externally and then it's somebody else who is selling the carbon credit.

[00:42:00] So I think that you must have, anyway, neutral stakeholders. It minus change also on the normal this point. And I think that yes, little by little anyway, in the eu you have this EU cross border directive on carbon credits, if I say it shortly. That is also will create during the next two years, some common methodologies that will be validated at the European level to say it is a negative carbon project.

And they can, and it's an additional project because when you were mentioning the GP Morgan example, a big important thing in the carbon credit market is that the additionality is that I need these carbon credits in order to do something and then and then the carbon credits help me to finance that.

But if it's just let it as it is right now, you have no additionality. [00:43:00] In fact, because you are not doing nothing. You are be paid, you are paid to do nothing right. And something that is already protected. So, it's quite a strange thing. I know my thing as an idea. And just to conclude very quickly, what is interesting on this EU cross border directive is that you will have a common standard, but it won't be like France will use that.

Any country will be able to do what they want. But if they want to use one of the methodology that is proposed by the European Union, if they fi finish their work and they find a consensus on it, they will be able to do it. And to say we are using a methodology that is validated by the eu. . 

Excellent. 

Eric: You, when we were talking, or you were talking about greenwashing before you also referenced green hashing. , what's green hashing? 

Green [00:44:00] hashing is. 

Jamil: when companies are ashamed to communicate on their offsetting strategy, for example, because they're afraid to be accused of greenwashing after.

Okay. by doing that. So, they prefer to avoid it, and I think it's because a lot of times they're not sure about what they have purchased. Because they don't know exactly, and so they prefer, let's not say nothing because maybe in one year we will know that this forest, in fact, they ha they have exp AppD some farmers in this country because they wanted to make a big investment to make this forest or other things like that.

So they said, okay, let's not communicate too much. And if sometimes the company is a little bit more cynical if I can say it like that. They will communicate on some carbon credits. They are sure of. From local projects and for very expensive ones, [00:45:00] and, but they will purchase all the other ones on projects that are not so sure.

And also, because there is this problem of the vintage of the carbon credits. So, it's, if you are purchasing carbon credits, you can do it on some platforms that you, as I mentioned, you can purchase carbon credit from 2007, from 2004 and all that. So that's under also by the association, the NGOs, the consumer don't really appreciate that.

So you have a lot of issues that are quite frightening for companies when they are communicating on that. 

Eric: I, yeah, I guess it's part of an evolution where if you're gonna go out and say, Hey we're totally carbon offset you, you better you better have something to back that up. ? Yes.

Essentially, yes. Why? Why are you a hundred percent neutral? Because we bought this land that was already protected. Yes. And now we just say it's, we get all the carbon benefit. Yes. That's why we're offset. [00:46:00] Oh, okay. So switching gears to, to the blockchain component of it.

That the way you create a market, the way that you verify put metrics on chain in immutable format, potentially to increase information sharing and data analysis. Certainly the secondary a, a robust secondary market helps fund, right? Cuz if people are excited and they're buying in the secondary market, that's great.

But by the same token, I think one of the things that we talked about is, and I don't wanna place words into your mouth, but I, is that sometimes the secondary market might be too soon. And maybe, maybe you could talk a little bit about the role of the secondary market and the timing of the secondary market as it relates to the whole, building out this [00:47:00] ecosystem that, that supports the, that supports negative carbon project.

Jamil: Yes, as you're right I'm, I really think that it's a little bit too soon to speak about a secondary market about creating a secondary market as we don't have clearly now a primary market, if I can say it like that is well organized. We have all this problem on standard that you met, that we spoke about before.

We have a lot of different issues. And anyway, if we are speaking about high quality projects, we don't have enough high-quality projects for the moment to have really a secondary market. Then after, when you are speaking about secondary market, let's say that we are speaking about carbon offset carbon credits.

You are speaking about a commodity. No, and we are cre creating this secondary market, but I'm going to say it very simply, but the gold is the same everywhere. If you are [00:48:00] purchasing one gram of gold in South Africa, in England, in France with x carat for example, you will buy the same thing when you are purchasing a carbon credits, how it can have the same value, you are not going to have the same price for carbon credits, for reforestation, carbon credits, for regenerative agriculture, carbon credits.

So, what are you going to do? You are going to make 10,000 of secondary market for each kind of project or from each country, or you are going to create carbon credit pools if you are speaking about blockchain when you are mixing everything and it gives you a certain price. But when I'm purchasing this carbon credits, you, you cannot create the liquidity just because of the technology.

That makes, that make it available. The product also must be [00:49:00] common the same and after he can be liquid, but in our case it's not what we are dealing with every day. 

Eric: And so, it, moving from the secondary market. Does the, does do dis distributed ledger technologies, do they facilitate data sharing for the people who are purchasing the carbon the negative carbon credit so that they can, so that it's printed to a blockchain and it's immutable and or it does, is that of also low value?

Because ultimately if it's a primary market, it doesn't necessarily need to be on it can be centralized at data. 

Jamil: Essentially, if for the moment if currently we would have a public registry with take made by a [00:50:00] public stakeholders and everything, it will be more complicated to say that we need blockchain or a blockchain ledger.

But in our case, we don't have it. We have to say it. The carbon credit market has been created as a non-state market. So, without an authority that is that, that is verifying the transaction without a public ledger. So in fact, yes, we don't, we need blockchain, I think, and we are using blockchain on, on our platform, but we are using, people don't know that we use blockchain.

In fact, we are registering all the transaction on the public blockchain. They're available. We give the traceability, the transparency, but for us, it's just a part. Of the answer to the trust problem and for us anyway, we are working for many years in blockchain technology. As we are working for [00:51:00] more than several years and our C T O also, we have developed really a lot of carbon with a lot of blockchain project for public authorities.

And all the time the blockchain was like 10% of all the IT solution we delivered. It has a purpose. For example, it's a proof of or if we put some smart contract, it can optimize that and that because we need it in this specific context, but the end user doesn't have to. The company that pushes, we said, okay, it's also on the blockchain.

You can click here. Here you have the transaction, you have all the history of the carbon credits. But I can tell you that no company has used our platform or no public stakeholders and now interesting by, it's interested by our platform because it's blockchain, it's really 10% of the commercial presentation of [00:52:00] Nome of it.

So, it's not the main argument, it'll be, it can, it'll be also useful in the future because there will be several other products that will be developed on our platform, on different platform insurance products maybe, or maybe also some leak secondary market. Why not in a few years? But for the moment, it's not the case for the moment.

We have to build the trust. We have to build the trust with the buyers of carbon credits, and we have to build this trust in order to attract more projects. Because very soon there won't be enough quality, high quality projects. We are really in the lack of project of carbon sequestration. And when you start a project like agriculture, regenerative agriculture, the first carbon credit are emitted after four years before is just, how can we call it?

Carbon forward credit. You have contributed, you have co-finance a project, and then you will have to wait for [00:53:00] the carbon credit. So, for me the main priority now is to make this solid work. This real work with all the stakeholders. Not saying that you are going to purchase something that is not sure and that maybe you will sell it.

And anyway, for me it the purchaser are not interested by that. But I'm, we but we, sorry. We are speaking with companies with public authorities that purchase carbon credits. We are far speaking with companies or with, no, let's not even companies with individuals that want to speculate on carbon credits.

I think it's not at all the same things. 

Eric: Certainly, one would hope before you get the speculation on it that there's more building to make sure that people are speculating on something that has value. So yes. 

Jamil: And after you have very serious stakeholders. I'm not going to [00:54:00] mention them, who are really creating trading facilities for carbon credits that are linked with also big trading companies or you have a lot of, and let's say that Wall Street, both of Frankfort per, are also interested by this market.

So you will have this secondary market of carbon credit at an institutional level in the future. 

For sure. 

Eric: One of the last questions here is, The, an early focus on secondary trading, does that help you because it creates a tension in the space, or is that a hindrance because it complicates the narrative?

Jamil: I, no, my thing that a lot of things that we are hearing my right now for sorry to say that are hindering Yes. Our effort because, first of all with the blockchain, you had all always this energy. You know the energy conception on blockchain. So, where you are speaking about [00:55:00] carbon credit market and you are using blockchain.

So all the time you had to explain why and why this blockchain protocol is exactly like a normal server, that we are not using more energy than a usual and then a traditional solution. So now to say the truth and we have felt that at the COP 27 where we participate with our solution and we felt that it's no more the question because now people know that we will use blockchain as a public ledger for carbon credits trading.

that is very clear of but even carbon credit purchase simply and that is very clear then people know that it's no more, we're not talking about energy consumption, but after, when you are going with all this idea that is in the news or, but that is also part of reality of speculation, of trading on crypto assets, then really another time the companies are [00:56:00] afraid and the public stakeholders are afraid.

They're afraid to be mixed with that, to have this, the image linked with that. So, it's really an issue. We have already the issue with the methodology, with the certification, and we'll take months and years to solve all that and to and to have everything clear and transparent to say it very frankly.

But if you are adding this layer of trading speculation linked with blockchain, yes, it's not something that is our work. 

Eric: So, we've covered a lot. Is there anything that you feel like we should have talked about but didn't? 

Jamil: Yes. What I would say is that and it's, it is a bit about to speak about our product, but it's the idea that we have to give the tool to the people to create their own carbon credit marketplace.

This is really the idea [00:57:00] because, if you are in a regional France, like we are speaking with the regional authorities and they want to create their own, the, their own carbon credit marketplace and be able after to provide to any companies in the territory the possibility to purchase carbon credits, but also to propose to the customers to purchase carbon credits.

Then you have the trust that is given. By the regional authority. And then the regional authorities, they have their obligation. For example, they must diminish the carbon footprint of the region of 50% in the next seven years. So, they have to go and speak with people, with farmers and with other project owners in order to incentivize them to enter in this low carbon transition.

So in fact we really think that we have the, to give the tools to the other stakeholder that they want to be the world marketplace that will [00:58:00] take all the market for carbon credits and everything, but that for this trust reasons, we have to give the tools for the local stakeholders. And this is really our mission and this is really our vision of the carbon credit marketplace.

And we are really surprised every day by the will of the people to take this tool and to do it. , which can be I think, a little bit surprising. But no, it's the reality. They really want to do that. They really want to create the regional marketplace for carbon created here, the local one here, the, for this kind of activities because they need to do that.

And after people say yes, but there will be many marketplaces. But I don't see the issue there for the moment in the market. I don't see any issue in that. 

Eric: And particularly if the local market is the one you trust. 

Jamil: Yes, exactly that. And it's where you want to have this local impact. It's exactly that.

Eric: Right. [00:59:00] Excellent. Thank you so much for coming on the podcast. It was a great discussion. 

Jamil: Thanks a lot Eric, for your invitation really. And thanks. It was really a pleasure to speak with you about all this very, it's an old market, but it's evolving every day., and I'm sure that in two and three years it'll be totally different if we have another occasion to speak together.

I hope, I think that we'll speak about other subject, other innovative technology for carbon sequestration about new legislation. It'll be very interesting. 

Eric: For sure, for sure. Again, thanks so much 

Jamil. 

Jamil: Thanks again, Eric, for your invitation. [01:00:00]