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Environmental technology startup Veridium Labs is working with IBM to turn carbon credits into a token that is to be traded on Stellar Network. Veridium will use IBM’s blockchain solution to address the excessive friction typical of the carbon credit space.

Carbon credits are certificates or permits giving the owner the right to emit one tonne of carbon dioxide (CO2) or its equivalent in a related greenhouse gas. The goal of these instruments is to reduce greenhouse gas emissions. These certificates can be traded and have already created their own market, which is generally managed via exchange platforms.

Veridium, a subsidiary of EnVision Corporation, wants to streamline the trade process by converting carbon credits into digital assets traded on blockchain.

IBM announced on Tuesday it was collaborating with the startup by providing its blockchain solutions.

The new token is called VERDE (VRD), and is presented as “the world’s first net-positive social and environmental impact offset integration solution.” IBM said the token would be fungible, suggesting that it will be redeemed for another asset of the same type. VERDE will be traded on Stellar, another startup that IBM has been collaborating with. Stellar issues the eighth largest cryptocurrency, Lumens. Initially, VERDE will comprise Triple-Gold Certified REDD+ credits from InfiniteEARTH, another subsidiary of EnVision.

Todd Lemons, co-founder and CEO of Veridium, commented on the new solution:

“For years, we've been trying to mitigate environmental impacts at every point in the value chain, however previous solutions still presented significant complexities and costs. Our work with IBM is the first step in dramatically simplifying the accounting and offsetting processes, and therefore ultimately helping reduce costs.”

“Our digital environmental assets are designed to help companies and institutional investors purchase and use carbon credits to mitigate their environmental impacts today, and even hedge their potential carbon liabilities risks in the future,” he added.

Bridget van Kralingen, senior VP of IBM’s Industry Platforms and Blockchain division, expressed the company’s readiness to help the startup develop a new sustainable marketplace.