JPMorgan’s Kinexys explores carbon credits on the blockchain

Updates at 9:43 AM ET to reflect statement received from company.

JPMorgan Chase (NYSE:JPM), which has been exploring blockchain uses for years, is putting carbon credits on the blockchain to see if the technology makes tracking the assets more efficient, the company said Wednesday.

The bank’s Kinexys blockchain unit is partnering with S&P Global (SPGI) Commodity Insights, EcoRegistry, and International Carbon Registry to evaluate a new application that will tokenize credits listed in registry systems overseen by the three companies, according to a company statement.

The company will assess blockchain technology for activities such as tracking ownership of the credits — from when they’re issued until they’re retired.

The hope is that the technology will address the challenges that carbon credit markets face in inefficiencies, a lack of standardization and transparency, and market fragmentation, JPMorgan (NYSE:JPM) said in the statement.

One tokenized carbon ecosystem, “in which credits are seamlessly portable between sellers and buyers,” may help resolve those challenges, it said.

“Tokenization could support development of a globally interoperable system that adds confidence into the integrity of the underlying infrastructure,” said Alastair Northway, head of natural resource advisory at JPMorgan (NYSE:JPM) Payments.

A carbon credit represents one ton of CO2 emissions that have been removed from, or not added to, the atmosphere, usually through forestry or renewable energy projects.

Bloomberg News reported the news earlier.