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With contributions from Wes Geisenberger (VP, Sustainability & ESG) and Hania Othman (Director Sustainable Impact EMEA).
I. Introduction
As the world considers the results of COP29 in Baku last month and looks ahead to the World Economic Forum in Davos in January, pressure on the voluntary carbon market (VCM) and fast-approaching Article 6 markets to deliver tangible gains for climate action is set to rise sharply. In parallel, numerous companies are expected to become subject to mandatory climate and environmental disclosure law worldwide in the coming months, potentially reaching over 10,000 U.S.-listed firms under frameworks such as the EU’s CSRD, California’s SB 253 and SB 261, and similar rules emerging in New Zealand, Singapore, Malaysia, Australia, Hong Kong, South Korea, Japan, and more. Achieving existing climate goals enshrined in the Paris Agreement, let alone increasing ambition in line with newly struck COP29 deals, all while staying in lawful compliance with strict new transparency requirements, will not be easy. Success will hinge on fully enabled global cooperation, actionable insights, and higher levels of trust in the data underpinning environmental claims than was ever feasible before.
The HBAR Foundation Sustainable Impact Fund (SIF), a key ecosystem development initiative within Hedera’s decentralized public ledger community, aims to leverage Hedera’s uniquely fast, scalable, and energy efficient DLT to bring transformative change to both spheres – to the voluntary and compliance carbon markets, expected to grow by hundreds of billions to over a trillion dollars in annual value by 2030; and to greenhouse gas (GHG) emissions tracking, accounting, and reporting performance, which legal and market forces are poised to elevate center stage even faster. To accomplish this, our principal tool has been targeted grantmaking amplified by close technical support and wraparound legal, policy, and business advice, with the goal of dramatically enhancing the data quality and transparency of environmental and sustainable development projects around the world. Since our inception three years ago, we have approached every funding decision and organizational partnership through a mission-driven lens: will the engagement advance one or more of five core goals, which together constitute the SIF’s investment thesis as well as our strategic plan for climate impact:
In tandem, our team has been mindful of the catalytic role played by Digital Public Goods (DPGs). To support a Just Transition, we must allow the vulnerable communities least responsible for, but often disproportionately affected by climate change, to share in the financial benefits of natural-capital projects intended to fight it. Yet, to ensure that high quality climate assets are broadly beneficial will require high quality data that is broadly accessible. In promoting rapid development of the open-source Hedera Guardian and its accompanying user and developer ecosystem, we have sought to democratize access to climate markets by giving every interested participant a digital account capable of attesting data as well as receiving value. This means that within the Guardian ecosystem, climate assets bought or sold will be contextualized by far superior data than is available elsewhere. The data advantage enables us to incorporate and immerse a far more diverse set of market and community actors into the climate asset life cycle, preserving their agency, notwithstanding the VCM’s fast pace of change and history of information asymmetry.
Earlier this year, we published Earth Day 2024: A Year-In-Review at the Sustainable Impact Fund (SIF), which summarizes these and the SIF’s other efforts to-date. The piece illustrated how our early rounds of investment had, for the first time, truly “opened the books” on climate finance. It showed how Hedera’s technology could advance climate mitigation and adaptation causes at scale with unsurpassed transparency, credibility, and equity. Our recently published Post-COP29 Strategic Prospectus: Energy Markets and Hedera DLT in 2025-26 highlights similar opportunities in the next 24 months for Hedera’s public ledger, in combination with the Guardian, to accelerate the energy transition, specifically with respect to electricity trading and renewable generating capacity. In this piece today, we circle back to what unifies our ambition to improve all three domains, from climate markets, to environmental disclosure, to clean energy: better data quality.
Below, we take a deep dive, exploring how digitizing and open-sourcing environmental methodologies while leveraging DPGs like the Guardian will make levels of data quality significantly higher than today’s norms table stakes in the climate, ESG, and energy industries of tomorrow. With the proper enablers in place, what the SIF calls “3D, In-Color” climate data – our concept for improving “depth” as well as “breadth” of environmental data – will unlock growth in the VCM, derisk ESG reporting compliance for major corporates, and empower vulnerable communities across the Global South to reclaim their climate stories.
II. The Need for "3D, In-Color" Climate Data
With increasing scrutiny from regulators, investors, and civil society, the carbon markets are rapidly evolving, and pressure to deliver results while improving transparency and accountability has never been higher. Yet, legacy carbon markets and our current emissions accounting frameworks are fraught with data gaps, inconsistencies, and low-trust standards. Single data points often become the basis for comparing projects across vastly different regions, legal and socio-cultural contexts, and ecological systems. While standardized methodologies are used to some extent, the results often lack a deeper context or granularity. The variability in regional and ecosystem-specific factors makes a one-size-fits-all approach inadequate.
Indeed, in today’s market, newspapers, academics, silicon-valley-backed startups, and politicians routinely write off large swaths of climate projects, or at least strongly urge that they hold little to no value. Most are Global North stakeholders with outsized influence on market off-takers, yet few have ever actually visited the projects they malign, and fewer still have substantive expertise or sometimes even basic familiarity with the regions impacted by their opinions. These commenters have fuelled an unhelpful discourse around climate projects that has strayed from data and evidence in favor of politically popular attacks on methodological- or standards-driven brands. This brand-driven alignment has encouraged judgments and set market-moving precedents that have not always been grounded in systemic data or rigorous analysis, but merely expedient virtue signaling grounded in anecdotal examples thinly supported by evidence.
It is not enough to rely on brand-centric labels of quality, on ratings, or siloed access to project data gate-kept by financially excessive subscriptions aimed primarily at traders in New York and London. This obscures the efforts – and often significantly damages the reputations – of projects, their developers, and financiers, who in fact may be exceeding the very standards called into question, and regardless often care deeply about adding value to the local and vulnerable communities at the forefront of sustainable development. This inflicts collateral damage on the VCM, as well as the legitimacy of emerging market-based mechanisms like Article 6, that should not be underestimated. Our “3D, In-Color” concept addresses these shortcomings by providing a multidimensional view of climate data. We believe in cultivating an ability to provide quantitative analysis to the market, not just on the standard or methodology, or a group of experts to determine quality, but all of the rich underlying data generated by projects on the ground.
This starts with methodological digitization. The so-called depth of data answers the questions: “Is in fact a Tonne?” “How do I trust the tonne?” Rather than relying on singular data points, which merely fulfill methodological requirements, we instead strive to facilitate contextual comparisons. This, in turn, leads to clarity about sources of data by integrating a far richer tapestry of environmental, social, and financial data attributes. Key to this capability is the Hedera Guardian, which as of this writing is alone in the market in its ability to:
This is how we quantify the true value of climate projects, and how we address one of the key shortcomings of traditional offsetting: that carbon credits ignore, or at least cannot reflect the value of, positive spillover effects. In other words, some projects have co-benefits; they positively affect local ecosystems and communities beyond a quantity of CO2e removed, reduced, or avoided. After all, “sustainability” represents a vastly more complex and interconnected system of values than we typically acknowledge in the fight against climate change. What counts is not only evidence of decarbonization, although this obviously matters. Rather, we need quantitative evidence and analysis of a range of socially salient impacts, from biodiversity, to community and economic development, to financial equity.
The SIF’s “3D, In-Color” approach ensures that these co-benefits are properly documented and rewarded, making projects more attractive to investors who are seeking impact beyond emissions reductions. For example, a reforestation project might traditionally be valued only by the amount of carbon sequestered. However, with a “3D, In-Color” approach, we can also quantify benefits to local wildlife, soil health, water retention, community livelihoods, healthcare impacts, energy infrastructure, and much more. Increasingly, consumers and investors alike request this information, and we expect demand to grow exponentially over the next five years, including on the part of government regulators from Europe to Africa to Asia. They will all demand to know: of the billions in climate finance my country has pledged, of the millions in climate assets my company has bought or promised to buy, will they support biodiversity conservation, or improve water quality, or provide employment opportunities, or and enhance community resilience to extreme weather? No doubt questions will be asked that, as of December 2024, we cannot easily predict. But it is clear: data attributes will be the difference between a climate or environmental project that hits minimum requirements and one that is in high demand because it genuinely contributes to sustainable development across multiple collateral domains valued by the market. With “3D, In-Color” data, we have an opportunity to transcend the limitations of traditional carbon metrics, enabling both investors and local communities to be far better served. Ultimately, this will also help us to paint a dramatically more accurate, nuanced, granular, and comprehensive picture of climate-project outcomes, so as to aid policymakers in filling the gaps.
A. Data Depth: Building Trust through Granular Data
Data depth refers to the richness and reliability of the underlying information. It is not enough to simply know that a carbon project exists and follows a methodology – the data must tell a deeper, more nuanced story about the “who, what, where, and how”; about the project's real-world impacts, the methods it used, the people who implemented them, the technology at their disposal, and character and quality of outcomes achieved. Data that has “depth” allows stakeholders to evaluate climate projects along these lines. It gives them a full and comprehensive understanding of how datasets were generated, recorded, validated, processed, and transmitted. It “opens the books” on the process by which people know what they think they know, including verification by third parties, consistent and documented quality control measures, as well as full transparency in data collection, so that anyone reviewing the dataset can trust in its accuracy and authenticity without having to conduct exhaustive forensic investigations.
This is where Hedera’s Guardian technology is pivotal. It embeds immutably recorded trust attributes directly into the data, providing a foundation for more informed and confident decision-making built on a public, transparent, and audible digital platform open and accessible to all. With comprehensive contextual data informing judgments about projects and assets, all market participants can verify quality for themselves, whether that means environment integrity, biodiversity co-benefits, financial equity or, as is usually the case, some combination. To illustrate, imagine a scenario in which a reforestation project’s claims are questioned. With “deep” data, anyone – from regulatory bodies to journalists – would be able to trace the lifecycle of that project’s credits, including how its measurements were taken, what verification processes it used, and what impacts were achieved beyond carbon sequestration.
Data depth is not just about how much data we collected, but also its quality. To achieve the level of granularity necessary, here, projects must employ sophisticated monitoring systems, such as IoT sensors, satellite imagery, and field-based surveys, all integrated through decentralized digital tools like Hedera’s Guardian. Each data has to be recorded separately and point immutably, so as to ensure that it cannot be altered down the road. A high level of transparency makes the underlying data trustworthy and helps prevent issues like double counting or false claims, which have plagued carbon markets in the past. A mangrove restoration project, for example, might involve an array of different metrics – carbon sequestration, biodiversity, local fish populations, flood prevention benefits, etc. Hedera’s technology allows for the integration of these data streams into a single, verifiable record able to capture both quantitative and qualitative information. This makes visible to stakeholders the full scope of a project's environmental and social impact, which an emissions reduction factor will never be able to match.
B. Data Breadth: Expanding the Attribute Categories
Data “breadth” refers to the diversity of data categories collected, extending beyond traditional carbon accounting to include a broader range of environmental, social, and governance (ESG) metrics. Incorporating data on biodiversity, socioeconomic impacts, community welfare, and the distribution of financial benefits paints a richer – a more “3D” – picture of project impacts. Enlarging the set of visible attributes in this way allows market participants to recognize and reward projects for contributions beyond carbon. In effect, we gain a mechanism for differentiating high-quality projects and, in turn, influencing their valuations on the market. The SIF’s partnerships, such as with Demia for secure data storage, access, and trust scoring or dMRV provider Hyphen Global AG for direct-measurement methodologies, are instrumental in expanding this breadth and normalizing it in carbon-market practices. As Demia CEO Mat Yarger wrote in his recent column, Building Trust and Efficiency in Carbon Markets: The Role of Verification and Validation Bodies (VVBs) in a Digital Age, far too many individuals and companies open to investment in carbon assets and with the resources to make a difference are holding back. Why sit on the sidelines of a market poised for explosive growth? Put simply, the reason is uncertainty about impact. Slow, costly, and unnecessarily complex validation and verification processes make clarity about emissions-related benefits difficult to come by, a problem Mr. Yarger has a plan to address. Today, most would-be investors have zero path to clarity about environmental co-benefits, let alone the broader social dimensions of sustainable development. Therefore it is vital to move beyond the legacy approaches that focus almost exclusively on CO2e and neglect other attributes. A more holistic model of climate action that values contributions across multiple dimensions by surfacing a wider set of data attributes is how to support a more equitable distribution of climate finance and ensure communities receive fair compensation for contributions made. This not only serves the interests of climate justice, but channels climate finance to where it can have the greatest impact.
III. Market Improvement through Trustworthy Data that is Deep and Broad
As discussed, the VCM has struggled with the prevalence of brand-driven metrics and proprietary data, leading to mistrust and skepticism among stakeholders. Attempts to paint a more nuanced or holistic picture of the VCM have frequently been met by a web of obfuscation via complexity and poor routing, whether top down or bottom up. Because of this absence of transparency and difficulty accessing salient data, carbon projects have often been denied the recognition – and, critically, the financial support – warranted by achievements. Worse still, the influence of ratings from entities far removed from on-the-ground realities has frequently distorted perceptions of project value. One of the ways that the SIF addresses these obstacles is by investing in digitized and natively digital environmental methodologies.
By leveraging the Guardian and Hedera’s public ledger, the SIF’s partners – like Envision Blockchain, Allcot.io, Exponential Science, ATEC Global, and others – are transitioning legacy methodologies to fully digital, open-source formats. This will help to scale carbon markets in ways easy to underestimate. Digital transformation here means that all data, from project design, to monitoring and verification, to transactional records, is transparent, accessible, and correctly structured for easy comparison across projects. Ultimately, this reduces the reliance on brand-based intermediaries and allows for a data-driven evaluation process. However, ensuring data accessibility is a no less critical hurdle to improving trust in the market. Historically, data used to assess carbon projects has been largely siloed or hidden behind paywalls or buried in hard to navigate PDFs. This opacity fueled skepticism and undermined confidence in the market. But in digitizing methodologies and making project data accessible in standardized formats at little or no cost, the SIF is directly attacking the source of this distrust. We are creating a more open and equitable system that benefits all stakeholders – project developers, investors, and local communities alike.
The digitization process also lowers barriers for smaller project developers. Traditionally, the cost and complexity of complying with verification requirements has meant that only large projects could afford to participate in the VCM. As Demia's work shows, this is solvable. With open-source digital tools and standardized, transparent methodologies, we can level the playing field. Smaller projects, including those led by indigenous communities, will now be empowered to participate in the market fully, helping to define the attributes of climate projects according to their own values, and diversifying the scope of climate solutions in the field.
Additionally, by enhancing data transparency with confidence, projects that are genuinely delivering positive environmental and social outcomes will now be distinguishable from those that merely satisfy minimum expectations. A project that restores a degraded wetland while also enhancing local fisheries will now get recognition beyond mere SDG benchmarks or minimum viable labels (i.e., SD Vista), leading to financial rewards in excess of those available for carbon sequestration alone, which, in turn, will incentivize development of projects that maximize co-benefits.
a. From Estimates to Measurements: The Role of Direct Evidence
Historically, carbon accounting has relied on emissions factors and estimates based on past studies or generic data. This was a necessary but imperfect approach. In today’s tech-enabled climate landscape, we can do better – much better. Digital innovation is now making it possible to measure emissions directly, at the source. For example, SIF-grantee Hyphen has pioneered an atmospheric-based methodology to verify emissions directly, using a combination of LI-COR eddy covariance systems and advanced atmospheric monitoring stations. By leveraging Hedera’s Guardian technology and Demia’s secure data fabrics to create unique digital identifiers for each sensor and log data immutably, Hyphen provides a transparent and auditable trail from sensor to registry. This ensures that the data used to issue carbon credits is of the highest integrity, and it reflects actual emissions reduction or sequestration activities rather than theoretical estimates. Importantly, Hyphen’s system also integrates biodiversity metrics, creating an even broader data set that reflects not just the carbon impact of a project but also its co-benefits for the surrounding ecosystem. This kind of multidimensional measurement is exactly what is needed to support successful climate policies and deliver reliable market-based solutions for natural capital projects. The paradigm shift from estimates to direct measurements is akin to the shift from analog to digital in other industries. Just as digital technologies have transformed finance, healthcare, and communications by providing more accurate, timely, and detailed information, so too can they transform carbon markets.
Direct measurements are especially important for ensuring the credibility of carbon credits. Estimates, while sometimes unavoidable, will always involve margins for error; uncertainties that carry a potential to erode trust. If, by contrast, direct measurement technologies are deployed wherever their deployment is now feasible – that is, because the digital innovation has removed feasibility constraints – the SIF and our partners will be able to drive adoption of a new standard, one that grounds carbon accounting in real data, collected in the real world, across multitudes of sensors embedded across multitudes of projects. Even where estimates are supported by advanced statistical methods, it cannot help being what it is: guesswork. As such, we believe estimates will never be as trusted by stakeholders as actual measurements could be, with the right technologies deploying in their support.
Making direct, high-quality data available will not merely shore up trust, it will enable sophisticated new climate-related financial products and services. For example, direct measurement technologies can now be used to assess the true carbon sequestration capacity of reforestation projects under varying conditions, such as different soil types or rainfall levels. Yes, this produces a higher resolution picture of those projects’ impacts. But this also translates to a more accurate valuation of the credits they issue. When such data is available via an immutably recorded, transparent ledger, stakeholders will now be able to confidently assess project’s performance free from concerns about data manipulation or misreporting. Co-benefits stand to benefit, as well. Sensors deployed in a wetland restoration project, for instance, will now be able to directly measure changes in water quality and biodiversity in parallel to carbon sequestration. Such comprehensive monitoring demonstrates the true value of nature-based solutions.
b. Digital MRV: Incorporating Privacy and Security into Data Quality
We do not often comment on the importance of data security, given Hedera’s high levels of security. Hedera’s DLT enables creation of verifiable, tamper-proof records, allowing project developers, investors, and other stakeholders reliant on climate data to be highly confident in its integrity. Still, any revelation of data breaches or evidence of significant tampering would pose extreme risk. This is true in otherwise highly trusted industries; it would be all the more damaging in the VCM, which has grappled with credibility issues for years. Projects in Global South regions where political and/or economic instability are high would be particularly vulnerable to reputational harm, even from relatively modest security threats. It is therefore essential to apply the highest levels of vigilance, and deploy the most advanced technologies, so that climate-related datasets are hardened against corruption or interference, malicious or otherwise, and climate data is both securely transmitted and stored.
This is the only way to build a resilient market that can thrive and grow in face of a quickly changing landscape of national and corporate interests, shifting legal requirements that widely vary by jurisdiction, and, of course, increasingly powerful and ever more widely available digital tools that can be just as easily used for penetrating security as maintaining it. And Demia’s integration of their Zero-Trust Data Model into Hedera’s Guardian framework provides a nice illustration of how digital innovation takes up this challenge. Demia’s Model effectively secures an offset project’s climate-data pipeline from point-of-collection through to point-of-reporting, with all dMRV data transmitted from the remote sensors to applications rendered tamper-proof. The approach is also privacy-preserving, as technologies like Zero-Knowledge File Systems and Secure Data Wallets are fully integrated, enabling secure data sharing without compromising privacy – especially helpful where project developers face business competition or compliance with local privacy rules. When the Guardian’s capabilities are layered in, every step of the climate-asset data lifecycle becomes protectable, from initial collection to verification to transmission to processing to on-chain recording, all the way through asset issuance and offers for sale.
Only a high-fidelity approach to data like ours will build public trust and confidence in the VCM, because only the SIF and our partners are focused on making every datum verifiable and auditable, so as to maintain complete integrity throughout the carbon-asset data lifecycle. Our commitment to open-source tools is pivotal, here, because it fosters an ecosystem of collaboration in which best practices can be shared and innovations scaled across widely distributed markets and geographies. Investors, project developers, financiers, regulators – all will be more likely to support, engage with, and/or and invest in carbon assets if relevant data probative of their value can be freely examined and evaluated without risk of jeopardizing stakeholder rights. Secure, verifiable climate data is also essential for maintaining compliance with mandatory climate disclosure laws, which are likely to grow increasingly stringent over time.
Finally, the use of Hedera’s DLT also facilitates improved stakeholder engagement. Transparent and immutable records supply a mechanism for holding project developers accountable to their commitments, which is key to maintaining trust and support from local communities. Due to the SIF’s work and that of our partners, communities participating in climate projects will now enjoy greater confidence that their contributions will be accurately recorded and fairly compensated – a win for climate justice as well as an efficiency gain, since benefits can now accrue more reliably where needed most.
c. Digital Transformation in the Registry Context: Building the Largest Repository of Digital Environmental Methodologies in the World
The SIF’s collaboration with platforms like EcoRegistry showcases how digital-first strategies can simplify project onboarding, reduce costs, and enhance data availability. By transitioning analogue processes to the digital realm, registries can provide stakeholders with instant access to methodologies, enable faster project approvals, and facilitate automated data integration for real-time monitoring and verification. The digitization of methodologies goes beyond merely transitioning existing processes to digital formats. It includes embracing new ways of managing and evaluating projects, cradle to grave. For instance, digitized methodologies can facilitate automated validation and verification processes, significantly reducing the time and cost required to approve new projects. This not only makes carbon markets more efficient but more accessible too, especially for smaller developers or communities that lack resources to navigate complex, manual processes.
Digital methodologies can also support adaptive management practices. By providing real-time data on project performance, digitized methodologies enable project developers to make adjustments as needed to improve outcomes. For example, if a reforestation project is not sequestering as much carbon as expected, examining project data against a digitized methodology can quickly suggest a reason. Whether the culprit is soil quality, water availability, tree species selection, or something else, we can then design corrective actions, or, if needed, calculate appropriate downgrades to the project’s credit issuances. For over two years, the SIF has targeted the digitization and open-sourcing of climate methodologies as a high-priority goal. The “3D, In-Color” data that this enables is critically necessary for increasing trust in our climate mitigation and adaptation projects, which in turn increases the value of the resulting credits. But it must be embedded into the DNA of our nature-based projects from inception, which requires digitization using the Guardian.
At least today, only the Guardian can deliver the iterative, outcome-oriented, feedback-sensitive qualities needed. Only digital methodologies can be leveraged to build reputations over time, incentivizing continuous improvement, and creating the empirical knowledge structures necessary to drive measurable progress. To date, the SIF’s accessibility-first strategy has enabled us and our partners to digitize a significant number of methodologies. As of this writing, our repository of open-source digital policies is the largest in the world. This is how we see Hedera becoming the universal standard in digital infrastructure for climate markets and ESG, and, in the process, enabling the carbon markets to evolve past their legacy constraints toward a credible, equitable, and most important, reliably effective mechanism for climate action and sustainable development. But there is much more work ahead. Through partnerships with registries and developers, as well as initiatives like DLT Earth’s Hackathon with Exponential Science, the SIF will continue to drive the adoption of digital tools we believe can dramatically improve climate-related data management, integrity, and transparency. Similarly, by working with EcoRegistry and other standards, our goal is to build the VCM’s singular reference library; a comprehensive storehouse of tools for projects to identify and implement fit-for-purpose strategies, keep up with changing regulatory demands, and, ultimately, maximize their market values.
Digitizing methodologies also means creating a future-proof system. As scientific knowledge advances and new best practices emerge, digital methodologies can be searched, cross-compared, updated and improved in real time, ensuring that projects are always using the most cost-effective, scientifically valid approaches. Adaptability is essential for responding to the rapidly evolving climate landscape and ensuring that our efforts to mitigate and adapt remain workable. By insisting on open-source, we also foster greater levels of collaboration and innovation, enabling researchers, developers, and implementers around the world to contribute to methodological improvements. It will not only speed up innovation, but ensures that climate methodologies stay relevant in the widest range of contexts, from tropical rainforests to arid grasslands, and from large-scale corporate projects to community-driven initiatives. This is how we see Hedera becoming the universal standard in digital infrastructure for climate markets and ESG, and, in the process, enabling the carbon markets to evolve past their legacy constraints toward a credible, equitable, and most important, reliably effective mechanism for climate action and sustainable development.
d. The Global Legal Bar Is Rising: Aligning Data Quality with New Mandatory Reporting Expectations
As governments around the world continue to implement stricter climate regulations and reporting requirements, the importance of accurate, verifiable climate data is growing. The European Union’s Corporate Sustainability Reporting Directive (CSRD), new climate risk disclosure rules in California (e.g., SB 253, SB 261), and anticipated regulations from other jurisdictions across Asia are setting higher expectations for climate-related data and disclosures. These regulatory developments create both challenges and opportunities for the VCM. To meet these rising expectations, carbon projects must provide more than just carbon metrics – they must deliver high-quality, multidimensional data that can withstand scrutiny from regulators, investors, and the public. The SIF’s efforts to enhance data depth and breadth are directly aligned with these evolving standards, providing a pathway for projects to meet new regulatory requirements while also differentiating themselves in the market. By leveraging Hedera's digital infrastructure, the SIF is helping to ensure that projects have the tools they need to meet compliance requirements efficiently and effectively. The Hedera Guardian’s capabilities for transparent, secure, and auditable data management are particularly well-suited for this new regulatory landscape, allowing projects to provide the type of data that regulators and stakeholders are increasingly demanding. Moreover, the alignment with emerging global standards ensures that projects can access international markets more easily. As regulatory regimes harmonize around common principles for transparency and data integrity, projects that have adopted best practices in digital data management will be well-positioned to take advantage of these opportunities. This is particularly important for projects in developing countries, which may otherwise struggle to meet the compliance requirements of international buyers.
Consider emissions accounting techniques, for example. Historically, greenhouse gas (GHG) emissions have been calculated using emissions factors – coefficients derived from earlier scientific research to estimate emissions. Mirroring our discussion of estimates versus direct measurement above, these traditional methods are useful, but suffer from limitations, especially when attempting to capture variability in emissions across different regions, seasons, and activities. Rising legal standards may not allow for those limitations in the future. But using new digitally enabled measurement tools, from satellite observations to ground-based sensors to aerial monitoring systems, in concert with Hedera’s sustainable DLT, will enable regulated parties to adapt when the compliance bar shifts. Real-time monitoring will not only help companies avoid costly non-compliance, but help them detect unexpected emissions spikes or sources, enhancing their understanding of feedback mechanisms that may help refine climate models and ultimately lower their carbon intensity.
IV. Conclusion
In the face of increasing global climate disclosure requirements and rising market expectations, the need for high-quality, trustworthy climate data has never been greater. The SIF’s efforts to digitize and open source climate methodologies, leverage direct measurement technologies, and develop new data attributes are laying the foundation for a more resilient and effective VCM. Hedera’s digital tools provide the transparency, depth, and breadth necessary to transform “3D, In-Color” data from concept to practice, ultimately enabling greater trust and participation in the fight against climate change. By investing in better data, we can create a market that values quality and integrity over quantity – a market that rewards projects for their real-world impacts, rather than their brand power. The path ahead is clear: if we want to meet our climate goals and ensure a just and equitable transition, we need to bring all stakeholders into the fold with the best data possible. The SIF’s work and that of its Hedera Guardian ecosystem partners is advancing this vision; making climate data truly “3D, In-Color,” accessible, and trustworthy for all. As the climate crisis intensifies, the VCM will have an increasingly essential role to play in channeling climate finance to the highest impact projects. But to succeed, these markets must be built on a foundation of trust, transparency, and accountability. The SIF and its partners are helping to create that foundation, ensuring that the data underlying climate assets is as robust, reliable, and multidimensional as the climate solutions they represent. With continued innovation and collaboration, we can build a future where carbon markets are not only effective but also equitable, transparent, and inclusive.
1. For background, at the earliest early stage (origination, registration, project finance, etc.), projects are often locked-in to a methodology. Optionality or project migration is often prohibitively costly and greatly impacts communities who are performing environmental and sustainable-development-oriented action without a full understanding of the methodology being implemented. Over the full project lifecycle, sometimes 30 years, the market develops and changes and scientific certainties shift or progress. The raw data is therefore critically important. In turn, measurement techniques and collection processes are highly relevant. Historically, this information has been uploaded manually via PDF or similar Web2 tools (e.g., spreadsheets, basic databases). It is then evaluated, conditioned, merged with other sources, and passed upstream to a VVB or Standard. To demonstrate climate integrity, this data has to be provided in an immutable fashion with “depth” from time of issuance by a standard so that market actors can take its measure. This is not possible with a PDF alone. Our belief is that after-the-fact issuance data may provide some additional context, but it actually reduces market confidence if new techniques are not included in the data pipeline for issuance upfront. Perversely, the check-and-balance here leads to more uncertainty for buyers concerned about integrity and asset value. To improve this we explicitly are suggesting that improvements be considered as iterative over the long arc projects.
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