When a Kanna ESG audit yields a positive result in carbon capture, meaning it captures more carbon than it emits, the producer will be able to use the carbon module to generate tokens that can be used within Kanna's technology, or traded on the secondary market.
As Kanna's audit is conducted in a decentralized manner and recorded on the blockchain, we will use this information to validate the creation of the credit and allow the minting of new carbon tokens backed by the ESG audit and the producer's operation balance.
Below, an illustration of the process:
Creation of a carbon credit that had its production chain audited in a decentralized manner based on different ESG criteria, as explained in this chapter of the company's white paper.
After the information submission process by the producer and verification by the Kanna network, the audit process information is recorded on the Blockchain, among this information are important details for the creation of an impact credit.
The environmental module of the company's protocol generates the carbon balance of the producer's operation, based on consumption, soil management, waste management, and mapping of the logistics chain, among other factors.
Since each carbon credit is equivalent to 1 ton of CO2 removed from the atmosphere, if the producer's operation generates a positive carbon balance, it can use the proposed solution (carbon tokenization module), to generate the carbon NFTs and create a new revenue source.
This carbon balance is backed by a governance audit involving the producer's regulation, ombudsman, and compliance, to bring trust. Furthermore, the social impact audit adds value to the asset in the market, showing all the benefits of the credit to society. The diagram below explains how the audit process and generation of impact credits work.
{% hint style="info" %} Kanna has already developed the first and most of the second stage of the above diagram, only remaining the carbon credit tokenization and bridge to integrate web2. The proposal for this grant is that we develop item 4 (tokenization) of stage 2 (Security Audit), allowing the origination of this impact credit from web 2, directly in web3. {% endhint %}
For a project to be eligible for carbon tokenization, it must have a high score in the environmental and governance audit, in addition to having an average score in the social audit.
