Minimizing Fraud in the Carbon Offset Market Using Blockchain Technologies
Fraud in the Environmental Benefit Credit (EBC) markets is pervasive. To make matters worse, the cost of creating EBCs is often higher than the market price. Consequently, a method to create, validate, and verify EBCs and their relevance is needed to mitigate fraud. The EBC market has focused on geologic (fossil fuel) CO 2 sequestration projects that are often over budget and behind schedule and has failed to capture the "lowest hanging fruit" EBCs - terrestrial sequestration via the agricultural industry. This project reviews a methodology to attain possibly the least costly EBCs by tracking the reduction of inputs required to grow crops. The use of bio- stimulant products, such as humate, allows a farmer to use less nitrogen without adversely affecting crop yield. Using less nitrogen qualifies for EBCs by reducing nitrous oxide emissions and nitrate runoff from a farmer's field. A blockchain that tracks the bio-stimulant material from source to application provides a link between a tangible (bio-stimulant commodity) and the associated intangible (EBCs) assets. Covert insertion of taggants in the bio-stimulant products creates a unique barcode that allows a product to be digitally tracked from beginning to end. This process (blockchain technology) is so robust, logical, and transparent that it will enhance the value of the associated EBCs by mitigating fraud. It provides a real time method for monetizing the benefits of the material. Substantial amounts of energy are required to produce, transport, and distribute agricultural inputs including fertilizer and water. Intelligent optimization of the use of agricultural inputs can drive meaningful cost savings. Tagging and verification of product application provides a valuable understanding of the dynamics in the water/food energy nexus, a major food security and sustainability issue. As technology in agriculture evolves so to must methods to verify the Enterprise Resource Planning (ERP) potential of innovative solutions. The technology reviewed provides the ability to combine blockchain and taggants ("taggant blockchains") as the engine by which to (1) mitigate fraudulent carbon credits; (2) improve food chain security, and (3) monitor and manage sustainability. The verification of product quality and application is a requirement to validate benefits. Recent upgrades to humic and fulvic quality protocols known as ISO CD 19822 TC134 offers an analytical procedure. This work has been assisted by the Humic Products Trade Association and International Humic Substance Society. In addition, providing proof of application of these products and verification of the correct application of prescriptive humic and bio-stimulant products is required. Individual sources of humate have unique and verifiable characteristics. Additionally, methods for prescription of site- specific agricultural inputs in agricultural fields are available. (See US Patents 734867B2, US 90658633B2.) Finally, a method to assure application rate is required through the use of taggants. Sensors using organic solid to liquid phase change nanoparticles of various types and melting temperatures added to the naturally occurring materials provide a barcode. Over 100 types of nanoparticles exist ensuring numerous possible barcodes to reduce industry fraud. Taggant materials can be collected from soil samples of plant material to validate a blockchain of humic, fulvic and other soil amendment products. Other non-organic materials are also available as taggants; however, the organic tags are biodegradable and safe in the environment allowing for use during differing application timeliness.