4-5. Why SINRA promotes the creation of carbon credits
When a holder of natural resources seeks to generate carbon credits, they must directly interact with national agencies or public institutions, preparing conditions for forest management and afforestation as well as organizing necessary information for applications. In the case of J-Credits related to forest absorption, it generally takes about 2-3 years from the planning phase to the generation of the credits.
Carbon Credit Generation Process
The value chain example for J-Credit generation consists of the following steps ① to ④:
① J-Credit Project Planning
② J-Credit Project Application & Certification
③ Monitoring & Certification
The most significant challenges in the above process lie in steps ③ and ④.
During the monitoring phase for J-Credit generation(③), meeting the standards of credibility for J-Credit often requires laser surveying. This involves deploying drones, helicopters, or airplanes to project the lasers, typically resulting in significant costs of around 3,000 to 5,000 yen per hectare.
(Ex. For example, for a 1,000-hectare forest, the cost would be approximately 30 to 50 million yen.)
Additionally, after investing time and resources over a 2 to 3-year period to finally generate J-Credits, the challenge of selling them arises. In Japan, where bilateral agreements dominate, municipalities without established sales channels often find themselves with limited means to sell J-Credits. As a result, many instances occur where they are unable to sell these credits.（④）。
Given these circumstances, the proactive creation of carbon credits, which require both time and money but may not sell, is hindered. As a result, a significant number of J-Credits derived from natural resources in Japan remain undeveloped.
At SINRA, we've devised a solution for challenges ③ & ④ by issuing unauthenticated carbon credit NFTs, selling the rights to claim future carbon credits before they are even generated. The revenue obtained from the issuance of these unauthenticated carbon credit NFTs is then utilized to conduct monitoring. This approach enables even municipalities with limited financial resources to promote the creation of carbon credits, a crucial step in advancing sustainable practices.