JPMorgan Chase Drives Carbon Credit Tokenization With Blockchain Pilot

The core objective of this project is to validate blockchain’s ability to track carbon credit ownership throughout its lifecycle—from issuance to retirement—addressing critical industry pain points such as inefficiency, lack of standardization, market fragmentation, and limited transparency.

“The voluntary carbon market is primed for innovation. Tokenization could deliver a globally interoperable infrastructure, boosting trust and enhancing liquidity,” said Alastair Northway, Head of Natural Resources at JPMorgan Payments.

In the voluntary carbon market, one carbon credit is equivalent to one metric ton of CO₂ that has been removed from or not emitted into the atmosphere, typically via reforestation or renewable energy projects. Tokenization converts these credits into blockchain-based digital tokens, enabling real-time tracking, transfer, and exchange in a secure, transparent environment.

According to JPMorgan, a unified, tokenized carbon ecosystem—where credits “move freely between buyers and sellers”—could resolve persistent challenges and unlock new capital flows for climate initiatives, particularly in emerging markets. Despite its potential, the sector still faces headwinds, such as accusations of greenwashing and concerns over the actual impact of some carbon-reducing projects.

JPMorgan, which has already invested in carbon initiatives and actively purchases removal credits, aims to establish itself as the leading “carbon bank.” The firm’s latest report highlights carbon credits as a maturing asset class but warns that without stronger infrastructure and ongoing innovation, the market risks further erosion of trust and demand.

The bank also criticized earlier tokenization attempts by other players, noting that issues such as double counting and trading of already-retired credits have undermined confidence in carbon markets. As JPMorgan pushes to set a new industry standard, its application for the trademark “JPMD”—a deposit token—signals ongoing commitment to blockchain innovation in traditional finance (TradFi).