Interest in voluntary carbon trading has risen in Estonia due to a lack of regulation and approximately 10 companies have launched on the market in a relatively short time. But the Ministry of Environment says there are few ways to introduce oversite.
The sector mediates between companies that want to reduce their footprint and forest owners who are willing to receive cash or cryptocurrency to associate the carbon with their property, Tuesday's "Aktuaalne kaamera" reported.
The EU has a carbon trading market between countries which lets them buy and sell emissions. Last year, Estonia made more than €200 million from the process.
However, the voluntary trading sector is largely unregulated and more and more entrepreneurs are trying it out.
Startup Arbonics was founded less than a month ago but more than 100 landowners have already signed up. Between them, they have over 10,000 hectares of forest.
To qualify the owner must have at least 10 acres of newly planted forest to offer.
The technology has been developed in cooperation with researchers from the University of Tartu.
"If a landowner comes to us, we can tell them in two minutes, based on the technology, what they should do on that piece of land to maximize their carbon and biodiversity return. We can create a bridge between the owner and the company so that its footprint is covered," said Arbonics founder Kristjan Lepik.
The landowner will then be given a certificate and a carbon seller will be found.
While Arbonics only deals with large clients and in real currency, there are smaller players on the market who will also accept cryptocurrency.
One example is Single Earth, which was founded three years ago.
The company has applied for a business license but not all companies that accept crypto are as transparent.
In a relatively short time, around a dozen companies have cropped up in Estonia that accept either cash or cryptocurrency in exchange for carbon trading certificates.
The Ministry of Environment believes voluntary carbon trading is currently in the same Wild West situation as ride-sharing apps were before legislation was introduced.
These companies have been mapped by the ministry so they can gain an overview of their activities. But so far there is no way to regulate or monitor the sector in either in Estonia or the EU.
"In the voluntary carbon market, as it is already quite established but unregulated, there may well be some greenwashing. Trading in the voluntary carbon market today is largely based on trust between buyers and sellers," Laura Remmelgas, advisor to the ministry's climate department, told AK.
This means it is also technically possible for a landowner to sell their patch of forest to several people.
Arbonics' Lepik said because the market is just starting out it could attract dubious projects and create confusion.
"The landowner must be very selective," he told AK.
Editor: Marko Tooming, Helen Wright