Alastair Northway, Head of Natural Resources at JPMorgan Payments, put it bluntly: “The voluntary carbon market is primed for innovation. Tokenization could deliver a globally interoperable infrastructure, boosting trust and enhancing liquidity.”
In practice, one carbon credit represents a ton of CO₂ removed or avoided, usually through projects like reforestation or renewable energy. By tokenizing these credits, JPMorgan hopes to enable real-time tracking and exchange, cutting out opacity and building confidence in a market that has often been dogged by accusations of greenwashing and unreliable offsets.
The bank argues that a unified, tokenized carbon market would let credits “move freely between buyers and sellers,” unlocking new funding streams for climate projects, especially in emerging economies. But JPMorgan also took a swipe at earlier blockchain experiments, pointing out flaws like double counting and trading of already-retired credits, which have eroded trust.
This pilot is part of JPMorgan’s broader ambition to become the leading “carbon bank.” The firm already buys removal credits and invests in climate projects, but in its latest report warned that without better infrastructure, the carbon credit market risks stagnation.
The move also fits neatly with JPMorgan’s larger blockchain play. Its trademark application for “JPMD” — a deposit token — shows the bank is positioning itself at the intersection of TradFi and Web3, pushing tokenization into both financial and environmental markets.