Proof of Carbon

Bitcoin inadvertently created a more direct link between exchange currency and carbon, through the CPU- and hence energy-intensive process of proof-of-work mining. Can we make a better link?

Edward Dodge has proposed using the blockchain as a distributed ledger of carbon account, with mining based on a ton of sequestered CO2. Let’s follow that suggestion but make each coin represent a kilogram of carbon.

Altcoin CarbonCoin replaces distributed mining of difficult to calculate numbers with mining by an environmental trust that uses six orders of magnitude less energy and puts profits into carbon mitigation. It relies on trusting that single third party organization, though. We want to have more decentralized platform management, as in many cryptocoins, while establishing this same carbon link.

There are a couple of other projects like Dovu or Treecoin which focus on particular types of carbon sequestration, but this sketch takes a different tack.

A Design Sketch

I wrote this design sketch a few years ago and then put it in a box called THINGS TO THINK ABOUT – URGENT. I’m not launching a billion dollar crypto play using it right now, so I figured I may as well share it here. I think we should have more public design sketches in software.

Basic Protocol and Squatting

We can push these initiating ideas a bit harder. As noted, forests and oceans are major carbon sinks. Prospecting rights could be claimed for mining, with proof of work replaced with an empirical proof of carbon. For each carbon sequestering device or location, you can associate a different allowed carbon coin mining rate. A corresponding proof of carbon could require 1) making the claim first 2) providing time and location specific weather information.

For secondary tropical rainforest, Bonner et al estimate 7.5-15 tons per hectare per year (via). That’s a pretty wide band, but let’s run with the lower figure for now and make that a claim worth 7500 coins per year. That’s 20.53 coins a day, which we’re going to round down to 20 for whole coin mining. We’ll also halve it, to 10, for reasons explained later.

For other types of carbon sinks, different rates would apply, but the protocol is the same.

Once a day, a miner can claim the right to mine the claim for that day. It has to provide

  1. The location in latitude and longitude.
  2. Proof the location is still a tropical rainforest through a public satellite photograph. Initially this could be from Google Earth.
  3. The temperature and humidity at 10 am that day in that timezone, at the nearest location providing a trusted source for that information. Initially these would be bureaus of meteorology and similar institutional sources. 

Otherwise the process is the same as claiming a bitcoin – it is advertised to the network and validated by other miners.

A miner has to obtain a mining license. This can be bought for 1 coin from any miner that has minted a coin in the last month within 5km of the desired location. If there are no miners for the last month in that area, it is free, and can be self-certified. This is to discourage mining spam. Given the computational costs are much lower than bitcoin mining, there would be a possibility to create a miner for every hectare on earth, and spam a coin attempt at every possible temperature and humidity for a given day. The license mitigates this, and cost might vary over time to manage it.

A miner using the basic squatter protocol doesn’t need to demonstrate any legal connection to the land or ocean involved. It’s a mathematical mapping only, as with the large numbers in bitcoin. The carbon coin mining claim is more important to the network than the legal title to the land, because double-claiming the carbon sink would make the carbon accounting invalid. For natural assets, the computer where the mining software runs need not be in the same location as the trees, though a maturing platform demanding more precision might call for devices on the ground, linking the Wood Wide Web to the internet and the blockchain. These specifically designed sensors can also have more openly validatable code, connecting as part of the Internet of Things (IOT).

Proof of carbon definitions for a type of sequestration can be captured as public software contracts, using Ethereum or a similar platform. They would need to be more dynamic than the bitcoin protocol because valid earth data sources would vary over time. 

The local weather data requirement gives people local to the forest or ocean concerned a small co-location advantage similar to that of high frequency trading systems to stock exchanges. The world’s greatest carbon sinks are not found in rich world finance capitals: this would give a small home town edge to those local to say the Amazon or Daintree rainforests, and encourage more diverse locations and owners for miners.

Legal Title Protocol

The basic squatter protocol described above allows fast-moving mining organizations to get going with very low upfront costs and similar bootstrap dynamics to bitcoin. 

There are advantages in linking legal title to the land to mining rights in the network, though. Miners have a financial stake in the carbon sequestering income of the land they claim – if trees are cleared, proof of carbon is lost. Owners of land have much more direct control over what’s growing there. Mining rights would even be an incentive to reforest cleared land.

Legal systems are complicated systems varying widely by location. There are problems of language and legal expertise. Legal title is often hard to validate in software, and even where such interfaces exist, title searches have significant charges, which could easily multiply with independent validation by network participants. Imposing these as barriers to entry for all mining would make participation uneconomic until the coin value was relatively high.

The solution in this protocol is to treat the two types of miners as complementary and have both. 

With both proof of title and proof of carbon, a miner can mine a second coin for each corresponding kilogram of CO2 sequestered by the underlying hectare of land. This gives no squatting protocol rights. The first coin is still determined by speed.

Title rights would often be shared, and any proof that does not rely on a central trusted source seems implicitly tied to proof of identity by an authority, and impossible to be anonymous, if published on a publicly verifiable blockchain, or through intermediaries such as banks or governments. Techniques for doing this in general, and the codification of proof regimes for each jurisdiction, will grow over time, and aren’t detailed here.

Deflation, Re-emission and Redistribution

Atmospheric carbon isn’t sequestered forever. Trees are cut down or eventually die. Ocean sinks and old coal mines leak. Tundra melts in the summer.

The simplest way to reflect this in a carbon coin is to make the coins expire. Those mined from a given type of carbon sink have an expiry date based on the ecological infrastructure that minted it. For secondary tropical rainforest, we use the example mean lifespan of 60 years.

The second way a coin can expire is if the sequestration source that backed it is destroyed, eg, the corresponding hectare of forest is cut down. This intensifies the economic incentive to preserve carbon sinks, as not just future revenue but existing wealth can be destroyed.

When this happens, it has the monetary effect of deflation. A fixed amount of commodity-like currency corresponding to the actual carbon stock is desirable in this case, as it would make market actors responsive to the actual carbon limits of the ecological layer of the economy.

We suggest the market would respond to expiry dates in a similar way it responds to expiry of options contracts or dividend rights, by value declining to zero near the end of their lifespan. Since it’s not desirable to have cash expire in your wallet, or to lose significant chunks of wealth because coins happened to come from the same source hectare, it would also create a demand for portfolios of coins balanced across many sequestration sources. Algorithmic balancing wallets seem a reasonable solution to this problem. This would also keep coins in greater circulation and discourage hoarding, which is more of a feature than a bug.

Linking Emissions

At this point you already have a commodity-based exchange currency platform equivalent to Bitcoin, including distributed mining. All of the usual financial and software infrastructures can be built on top of it. The main missing feature is money supply management available in central banking. That is deliberately designed out of Bitcoin too, out of libertarian grumpiness with the state. For carbon cryptocurrency it would be omitted for a more sincere representation of the foundational geophysics the whole planetary stack runs on.

That the coin is based on carbon allows extensions which reinforce carbon homeostasis. Carbon-emitting endpoints such as power stations, petrol service stations or factories could have corresponding IOT devices requiring spending carbon-backed coins to operate, basically acting as IOT smart meters connecting to a carbon exchange. Governing such a mechanism, and avoiding tampering to evade it, would likely involve both taxation enforcement and digital rights management, whether implemented by state or corporation. Because carbon emission would result in a transaction on a public blockchain, it would also be publicly auditable, depending on how much detail the emitting device is configured, or mandated, to disclose. This latter consumption piece isn’t necessary for the currency to work, but it does look like a good feature.

The Washington Consensus As Climate Governance

A whisper of global government already exists. We don’t call it that, usually, unless we happen to be conspiracy theorists talking about UN black helicopters. Our experience of the all-encompassing modern state makes the fragile spiderwebs of global institutions seem unfamiliar. 

The world government – a framework of agreed action through laws and common permanent forums –  is there, though. It’s found in pretty much the places you might expect – the United Nations, the International Monetary Fund, the World Bank, or the World Trade Organization. Political theorists need to make fine distinctions between global confederation and other forms of government, but when almost every nation is in the club, lines begin to blur.

In this familiar list of institutions, all but one were designed and driven to creation by Cordell Hull’s State Department in the flurry of institution building at the end of WWII. This is not to discount the role of other nations in this multilateral process, but it required extraordinary circumstances, and a new superpower, to bring them to the table.

The exception is the World Trade Organization, which took fifty painstaking, special interest-coddling years to come into being. As an example of the problem, the WTO is an effort to promulgate a Washington Consensus of free trade, but no Washington administration thought it could really commit to it when it came to free trade for its welfare-queen farmers. And the US was by no means unique in this regard, with Japan and continental Europe (later the EU) in the same position.

The Washington Consensus method for climate governance is like the construction of the WTO, or the European Union: get everyone from everywhere in a big room and marinate them in money and compromise until enough people are ready to sign what they were all taught at politician school was a pretty good idea in the first place. (WTO is reheated Ricardo and supra-national republican government is reheated Kant.) Kyoto is fourteen years old and deep in the same sort of diplomatic sausage mince GATT was in for half a century.

In other words, this solution is the solution we’ve been trying for a while now. It has some advantages. The incessant talking and committees are a conflict management technique, the idea being that people talking aren’t shooting one another. This is well and good, but an approach which relies on the benefits of inaction isn’t going to have much near term impact on a problem of industrial and economic inertia. There is always going to be some governments who see national advantage in derailing any more radical change than slow consensus.

My prediction is that we will not have any serious multilateral regulation of carbon, say through a World Climate Organization, before 2050. It and the Kyoto process may be part of the ongoing management of the climate, eventually,  but they won’t be a solution to the current industrial and economic design problem. We’ll be up to our ankles in cholera flavoured glacial melt and ecosystem failure by then. 

Al Gore’s right to say politics can be non-linear: but not in this forum. Solving climate governance with the Washington Consensus would, like the UN,  require a pre-eminent superpower focusing a group of allies on the issue; a climatological Coalition of the Willing. If Kyoto was going to fix climate change, it would have done so by now. It’s a needed process, but solutions lie elsewhere.

Deliberate Anarchy As Climate Governance

It is informative to think about the science of changing climate as two fields. The first is long-term meteorology, making predictions about how the atmosphere and climatic conditions change over long periods of time. This is about a century and a half old and built on physics, chemistry, and observations from a variety of real time and historical sources such as satellites and ice cores. The current dominant paradigm of long-term meteorology includes anthropogenic climate change driven by atmospheric carbon and other gases. It’s a very successful theory whose dominance has been cemented by a track record of new data emerging and anamolies resolving in ways which confirm it. The discovery that satellite measured temperatures were not accounting for relativistic effects caused by the speed of the satellites, and this was causing almost exactly the anomalous difference between ground and satellite temperatures, was one of the more dramatic of these. This was nearly ten years ago. The existence of a handful of outlying dissenting experts outside the paradigm is just confirmation that it’s a real scientific community; the same phenomenon accompanied Newtonian mechanics and the molecular theory in chemistry too. This is reality, as best we can tell.

The second field is political climatology, dealing with the ways a mass of people and their social institutions deal with the climate of the planet they live on. This is a new field at which we are still pretty awful (including attempts by climate scientists). I use the term political climatology deliberately, by analogy with the political economy, ie, economics, and the constraints that politics as a human behaviour places on it. We are pretty bad at the political economy, though we’ve had a few wins over the last century. At political climatology we are just pants.

I don’t just mean we are awful in that we have lousy outcomes, I mean the whole structure of the discussion and the seriousness of institutional design is lacking. The entire debate is in the wrong place. There are interesting arguments within climate science, and there are major and controversial policy decisions to be made. We have a science built on all the sophistication of the Englightenment and the Industrial Revolution, and a monster set of interlinked problems caused by the wondrous success of the same. Meanwhile our toolset for discussing and organizing around it as a society is like five drunk old men with head injury debating the existence of an iPhone.

There is one intellectually tenable policy position which can be shared between someone serious about seeing the world as it is and the fairy land tales of climate fabulists or deniers. That is the policy of deliberate neglect. Accepting the fact of human driven climate change, we choose not to make governments act to remediate it.

Though the changing climate is indeed something to dread and gird ourselves against, the argument goes, any political solution would cause damage too great to our institutions. 

Usually this is framed as economic cost, and people like Jim Manzi argue, contra Stern et al, that the GDP costs of mitigation are simply smaller than the benefits.

There are technical problems with Manzi’s argument: scenario choice is highly selective, and GDP is a lousy basis for century scale prediction. That latter post also suggests in an ecological catastrophe, money may not be everything. (When The Economist suggests you are suffering compulsive quantification disorder and need to sit back and smell the drowning flowers, something is up.) Nevertheless Manzi’s willingness to grapple publicly with scientific reality in arguing policy, something that say, George Monbiot, does routinely from a different political tradition, gets towards the type of debate required.

Climate change is a global problem, and worse than that, a global collective action problem. It’s also larger than a few percent of GDP. In the history of the world, there has been environmental catastrophe, but there has never been democratic world government. Dan Hannan, among others, argues that this is a straightforward function of the distance of the government from individual concerns. It helps to know that Hannan is a ferociously euroskeptic MEP, and has more recently found it convenient to disparage the science without fully disavowing it. Even souveriniste libertarian conviction politicians have bases to mollify, I guess.

The sorry record of corruption and bad policy in global institutions does rather support Hannan’s position, though. Indeed, even the experience of the smaller, transnational, EU supports it – technocratic, with little democratic check, and corrupt to the degree its accounts have not been signed off by an auditor in a dozen years. For those who support a different factional football team, consider the IMF, or the WTO. And as beautiful as the vision of the United Nations is, the power there is with the Security Council, a standing committee of Great Powers and their proxies. 

This is not a screed about UN black helicopters and mind control rays. We simply need to be clear-eyed about the state of our global political institutions before we hand them the Earth’s thermostat. This is especially since decades of dithering makes geoengineering more likely, or necessary.

Some (say, certain large, industrial, non-democracies) may  take the utilitarian line that political niceties are a luxury in the face of catastrophe – a case of give me liberty and give me megadeath. And certainly geophysics doesn’t care about politics. However, the argument for ecofascism is not only rather odious in itself, but highly centralised government has an appalling environmental record. Capitalism and democracy have their environmental failures, but communism is the most toxic pollutant man has yet devised. Contrast the Cuyahoga River and the Aral Sea. 

The environment, in this argument, is too important to be passed off to a global bureaucracy to create a Common Fisheries Policy for carbon. Human nature and its politics will not change any time soon. Better for liberty and ecosystems alike that nations remain in productive mutual anarchy.

That is not my position – this note is a way of thinking through the problem. There are other approaches. The world almost tried one with Kyoto-Copenhagen. Tech can change faster than human nature, and different social contexts allow it different expression. Deliberate anarchy is credible enough to be the benchmark. We can easily do worse. Can we do better?

花雨从天来 /已有空乐好 – 李白:寻山僧不遇作

A light rain fell as if it were flowers falling from the sky, making a music of its own – Li Bai, Looking For A Monk And Not Finding Him, Allen trans.