Imagine if you could save the planet every time you spend money.<\/p>\n
A Swiss-South African start-up has launched Toco, a digital currency which is backed by carbon credits.<\/p>\n
The currency can be used to pay for goods or transfer them to another account. Users can \u201cretire\u201d their Tocos to permanently lock away the corresponding carbon certificates to offset their own carbon emissions.<\/p>\n
Its developers say it is already accepted at some 50 shops and cafes in Switzerland and Denmark.<\/p>\n
Carbon credits<\/a> represent the removal or reduction of one metric ton of carbon dioxide from the atmosphere, with every toco representing that. For example, one Toco is currently about \u20ac26.<\/p>\n \u201cWe designed this initiative so that it can be a transactional currency so that we can use it on a day-to-day basis,\u201d Paul Rowett, co-founder of Toco, told Euronews Next.<\/p>\n \u201cWe specifically chose that route so we could create consistent demand in the carbon markets<\/a> so that the magic of an individual going and paying for their lunch in Toco and creating demand for decarbonisation is quite a magical concept,\u201d Rowett added.<\/p>\n He believes the novel monetary system is a solution for climate change<\/a> that doesn\u2019t compromise economic growth.<\/p>\n \u201cThe problem that causes climate change is inherently built into our economic<\/a> system as economies grow,\u201d Rowett said.<\/p>\n \u201cCarbon emissions are built into our economic system<\/a> and we don’t pay for them. It’s free to emit. And economic growth<\/a> in our capitalist world is fundamentally important,\u201d Rowett added.<\/p>\n When users purchase Toco with traditional currency, the Carbon Reserve, a non-profit foundation chaired by the currency\u2019s founders and based in Switzerland, uses these funds to buy carbon removal certificates from projects like forests<\/a>, renewable energy, or direct air capture from existing carbon markets.<\/p>\n These certificates act like receipts to prove that carbon dioxide has been removed from the atmosphere.<\/p>\n \u201cThose assets then form the underlying value that backs up the currency in circulation,\u201d Rowett said.<\/p>\n What is carbon trading? In 2005, the EU set up the world’s first and largest carbon market, covering about 40 per cent of the EU’s greenhouse gas emissions, the\u00a0EU Emissions Trading System<\/strong><\/a>\u00a0(EU ETS).<\/p>\n Globally, companies have drawn criticism for using carbon credits to offset<\/a> oil and gas extraction emissions, rather than transitioning away from fossil fuels.<\/p>\n Electric automaker Tesla generated $2.8 billion (\u20ac2.6 billion) from carbon credit sales in 2024, according to its\u00a0annual financial report<\/strong><\/a>.<\/p>\n While carbon credits<\/a> have existed as a concept for decades, the idea driving the Toco project is not yet mainstream, though some experts have expressed a belief that it could work in theory.<\/p>\n \u201c[Carbon credits] have to my knowledge never been seriously \u2013 that is, in official policies of large organisations or governments \u2013 thought about as a \u2018currency\u2019, although both I and some other scholars speculated about a decade ago that it could, in theory, come to this,\u201d Steffen Dalsgaard, the centre manager of the Center for Climate IT who has researched<\/a> carbon economies at the IT University of Copenhagen, told Euronews Next in an email.<\/p>\n \u201c[Carbon emissions] could be a new \u2019standard of value\u2019 for money like the gold standard used to be,\u201d he added.<\/p>\n How does Toco work? \u201cYou could fundamentally change the economic system because your underlying value is no longer, essentially debt, which fiat currency is based on. And it’s now something that we depend on, our world literally depends on,\u201d Rowett said.<\/p>\n Toco says the Carbon Reserve purchases \u201chigh-quality\u201d carbon removal certificates from voluntary carbon markets and holds them as assets, similar to how central banks<\/a> historically held gold to back their currencies.<\/p>\n \u201cIt’s an asset-backed currency and the asset that backs the currency is carbon mitigation certificates [which prove] that carbon has been removed,\u201d he added.<\/p>\n But who verifies that the carbon removal actually happens?<\/p>\n Unlike the compliance market like the EU ETS, where companies are legally bound to pay for their emissions, the voluntary carbon market<\/a> is where companies and individuals choose to offset their emissions by buying credits from environmental projects, often to meet corporate social responsibility goals.<\/p>\n In the\u00a0voluntary market<\/strong><\/a>, under which Toco operates, independent organisations such as Verra and Gold Standard issue serialised certificates of carbon removal or emissions reduction projects.<\/p>\n Potential hazard \u201cIn the design of this initiative, we’ve taken the positives of blockchain and discarded some of the things that we don’t agree with, such as the anonymous movement of money. We don’t believe in that because we believe that any kind of value transfer needs to come with security,\u201d Rowett said.<\/p>\n Yet some experts remain sceptical about using financial markets to protect the environment<\/a>.<\/p>\n \u201cI would urge caution both to investors and public policymakers. These coins are not the answer to our prayers to contain climate<\/a> change,\u201d Emilios Avgouleas, a researcher specialising in international financial markets and blockchain technology and the chair in international banking law and finance at the University of Edinburgh, told Euronews Next.<\/p>\n \u201cThey just multiply financialisation of a common good instrument like the carbon certificates, adding volatility to both markets,\u201d he added.<\/p>\n Avgouleas says both blockchain token and carbon certificate markets are volatile and connecting those can pose a \u201cdouble hazard\u201d of destabilising both markets.<\/p>\n \u201cMost tokenisation projects create serious links between the token and the underlying asset. Any adverse price impact on the token market is immediately transmitted to the market of the underlying asset, which in this case is the carbon certificate,\u201d Avgouleas said.<\/p>\n
\n<\/strong>The idea of linking money to carbon removal might sound strange, but it is an institutionalised practice that dates back to 1997 when the United Nations Framework Convention on Climate Change (UNFCCC) adopted carbon credits.<\/p>\n
\n<\/strong>Toco says it incentivises carbon removal efforts by making them a part of the currency ecosystem.<\/p>\n
\n<\/strong>Toco says it uses a permissioned blockchain to maintain a permanent registry of assets held by the Carbon Reserve. Its centralised blockchain also allows for transparency in tracking transactions, unlike some cryptocurrencies where ownership is harder to trace.<\/p>\n