JPMorgan Tests Blockchain Tokenisation of Carbon Credits to Address Market Fragmentation

JPMorgan's blockchain business unit Kinexys is developing and testing a blockchain application to tokenise global carbon credits, partnering with S&P Global Commodity Insights, EcoRegistry and the International Carbon Registry to pilot the technology on their registries. The initiative aims to address standardisation, transparency and fragmentation challenges in the voluntary carbon market.

The Kinexys carbon credit tokenisation system is designed to allow credits to be easily transferred between buyers and sellers, with blockchain technology facilitating asset record keeping and payments and enabling users to access and act on registry data from a single interoperable system. EcoRegistry and the International Carbon Registry have successfully completed initial testing of technical connectivity, data model compatibility and credit lifecycle management, while S&P Global will start exploratory testing including potentially its Meta Registry, which connects environmental registries around the world with carbon markets. JPMorgan's Alastair Northway said the technology could support 'greater information and price transparency, which could ultimately lead to greater liquidity in the market.'

The voluntary carbon market has grown rapidly but faces persistent challenges including double-counting risk, opaque ownership transfers, inconsistent credit quality signals and high transaction costs, all of which have depressed buyer confidence and market liquidity. Tokenisation on a blockchain ledger could address some of these structural issues by providing an immutable, auditable record of credit ownership and retirement, reducing the risk of duplicate counting across registries. As corporate demand for high-quality carbon credits grows ahead of net-zero target deadlines, infrastructure improvements that increase trust and reduce transaction friction are essential for market development.

For India, which is actively developing its domestic Carbon Credit Trading Scheme and hosts numerous Verra- and Gold Standard-registered carbon projects generating voluntary credits, the development of blockchain-based tokenisation infrastructure could improve the marketability of Indian carbon credits internationally. Interoperability between Indian project registries and global carbon market platforms through tokenised credit standards could reduce settlement risk and broaden the buyer base for credits from Indian renewable energy, forestry and agricultural methane projects. JPMorgan's initiative represents an early but significant step toward a more technologically advanced global carbon credit market.

Key figure — Demand for voluntary carbon credits expected to increase significantly over the next several years