Jan 20, 2023

Carbonbase CEO Max Song discusses using blockchain to empower enterprises, individuals and communities to offset carbon emissions and create a more sustainable world.

Video transcript

Climate change and the environment are a theme here in Davos, Switzerland at the World Economic Forum. And that's right up the alley of my next guest, Max song. He's the CEO of carbon base. They're trying to create a carbon credit Blockchain backed registry, the first one of its kind in Asia, right? Yes. Thank you. Great to have you. So tell me a bit about your vision and how, what is the status of this project? So I started the project actually after attending my first Davos in 2020 January, I come back from COP 25 and I was very concerned about the dwindling eight years we have left. So we totally blow up our carbon budgets. And this is a big news update for me. And I think a lot of people that we actually before the end of this decade is going to set the course for the next 200 years. We have eight years, six years left. Now, six years before what happens until we exhaust all of the carbon budget for 1.5 degrees. Which means that after that, if all human activity for industrial emissions ceases, if we just vanished off the face of the earth. The earth is still going to heat to 1.5 degrees. And that really gives us a short timeline for reacting to how do we decarbonise? How do we reduce the emissions of our planet? So, with this registry, what are you hoping for? What are the goals? So the most beautiful thing about a carbon registry actually is that it's a signing of economic value to the most important aspects of saving our planet. But today is visible to our existing economy. If you go and plant trees, if you go and do cook stoves, if you do carbon removal without a registry's existence, your effort is just charity. It's just you giving money to the public good and not being able to receive any return with the registry. We actually assign value to these activities and give people a chance to actually secure income for themselves in the future. And so there are four registries in the world today, one here in Switzerland and three in the United States. I sort of have a dual background of being a US and China resident. And I really believe in Asia being the next frontier of actually tackling the carbon emission challenge. So we're building, how receptive is Asia and you do a lot of work in China. You live in Hong Kong. How receptive are they to this registry? So I was very lucky to do something called the Schwartzman Scholars program in Beijing, which is like kind of a road scholarship of Asia. And I wrote a thesis on climate finance and public policy looking at us and China relationships. This is back in 2016, this gave me a lot of confidence that one day China was going to become a significant mover in this. But it took a lot of coordination from the central government. I started our project actually in January 2020 everyone thought we were crazy. Nine months later, actually in September 2020 was when Xi Jinping declared goals for China, the whole of China to be carbon neutral by 2060. And that actually led to a lot of tail wind and sort of support for the effort we're doing. Hong Kong is a unique place as well as you said, you seen the news, Hong Kong has gone through a very turbulent few years, but there's a strong concerted effort actually to build a green finance center in Hong Kong and especially we enabled. So we're really at the intersection of these two things, what is the position of China when it comes to Blockchain? And I'm thinking specifically of cryptocurrencies like Bitcoin because it's been banned in the country. So one of my other projects is called Sustainable Bitcoin Protocol. We're actually helping large miners become green using renewable energy and we saw a huge exodus of these miners leave China because of the policy from the government to be a world leader. Exactly 40 50% of global mining was actually in China now it's basically zero. And I think that China has been very concerned about the energy use of Bitcoin mining, as well as a lot of the monetary capital controls. And these other kind of major concerns. I will say though one of the unique things about what's happening today and I just came from Hong Kong last week is that the Hong Kong government is taking a very different approach. They're actually becoming very accepting and open about web through innovation industries being located in Hong Kong from both the license regime perspective, asset management perspective and even government officials showing up at blocking offices. Speaking next to CEOS of large crypto asset exchanges, do you think that they could become more Bitcoin friendly? Could Bitcoin mining return to China? That's a really tricky question. I don't think I can make a good claim about that yet, but I can say that there's an effort to build more real world application use cases of Blockchain in Hong Kong. So e abs electronic asset backed things I think are going to be a very big part of the new economy of Hong Kong. And I think Bitcoin has a very unique role to play in that. So are they more Blockchain not Bitcoin? I would say that there are more digital assets. So Blockchain is historically referred to a lot of enterprise use cases. Right. There's a chain, there's no assets being traded. It's only about recording ledger information, digital assets. I think for me represents the ability to actually put things on chain, things like carving credits, things like renewable energy certificates and things like mortgages. And these are places where I think you'll see lot of big announcements from Hong Kong in the near future. Well, it is interesting because they actually started their own NT market and they're starting to experiment with that. So it seems that they are interested in the technology and they have the CBD there, the head of innovation in that sector. But are they more interested in, I guess creating these technologies that are more in house rather than public blockchains? I think that one of the key things that I'm seeing a lot more of especially in Asia mentality from the regulators perspective is they want to encourage utility driven use cases of digital assets as opposed to investment driven use cases. Because the volatility of seen of the markets have actually severely impacted a lot of people, especially people who hold assets on exchanges and then went bankrupt. But I think for example, with NTS, there's an effort to actually put certificates, event tickets and even sort of work qualifications, things actually have sort of enduring value, but then are beneficial from being on chain recordings. And what about CDC development? Is there a vision to have everyone using retail cbcs in China? Yeah, I've watched this a little bit. I've seen some of the pilots and my friends have participated in some of the experiences. I think that there is kind of two challenges for cbds government thinking. One is how do you actually create new use cases for cdcs as suppose to fighting against wechat and Alipay for market share? Right. Because CBC originally was designed to be kind of a backbone infrastructure. If one of these two companies actually running 50% of the electronic payments in China had a problem, the country would not go into sort of a state of paralysis because they couldn't be able to pay anything anymore. So I think that was kind of one of the ideas of cbds in the first place for use. But the other exciting idea actually is the use of cbcs incentivized green action, which is if you were to do certain things in Shanghai or Shenzhen, you actually can earn cbds for your sustainable efforts. And that's actually a very interesting way to use cbcs because it involves smart contracts, involves being able to monitor and send you something directly to your wallets and also being able to change and tweak your behavior, especially from a consumption perspective.

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