Hedera FAQ

Frequently Asked Questions - partnership with the HBAR Foundation

Explore the most frequently asked questions and answers about the strategic partnership with the HBAR Foundation that focuses on utilizing Hedera to enable new decarbonization use cases for while driving the adoption of digital ID technologies.

Who is Hedera Hashgraph?

Hedera is an open-source public distributed ledger that utilizes the fast, fair and secure hashgraph consensus, which is much more efficient than blockchain technology. Its network services include Solidity-based smart contracts, as well as native tokenization and consensus services used to build decentralized applications. It is governed by a group of up to 39 term-limited global organizations, decentralized across geography and industry. The Hedera network is the most sustainable public ledger, and the governing council purchases carbon reductions to ensure that every transaction on Hedera is carbon negative. 
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What is the HBAR Foundation? Is it part of Hedera?

The HBAR Foundation is a separate organization from Hedera, founded to accelerate and foster a thriving ecosystem around the Hedera network and services. They do this through a comprehensive grant program that provides financial backing for projects, expert support across technology, marketing, and business development; and access to a thriving ecosystem that helps to raise awareness of projects, accelerate innovation, and scale adoption.
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What is carbon accounting?

Carbon accounting is the process by which organizations quantify their greenhouse gas (GHG) emissions, so that they can understand their climate impact and set goals to limit their emissions. In some organizations, this is also known as a carbon or greenhouse gas inventory. 

What is carbon offsetting? And how is it being evolved into granular carbon reduction?

Carbon offsets are credits purchased from projects that are designed to reduce emissions of planet-warming greenhouse gasses. Offset projects do this by implementing actions to increase the sequestration of climate-warming carbon dioxide into long-lived reservoirs of carbon such as trees, soils, and wetlands, or by reducing emissions of greenhouse gasses from such sources as landfills, farms and coal mines.

By utilizing the Hedera network, Avery Dennison’s connected product cloud is evolving carbon offsetting into a whole new approach of ‘carbon reduction’, using highly credible, auditable tokens, on a Distributed Ledger Technology, with real-time supply chain traceability at the item level. This gives brands much more granular visibility into carbon reduction. Here is an example of the types of carbon reduction and how they're being utilized now.

We are expanding the menu of “offsets” to include DLT-backed offsets, insets, and carbon removals (each increasing in costs and increasing in perceived positive impact, and all available via the platform), all of which can reduce a brand’s total carbon footprint and help them achieve net-zero goals.

What is the difference between carbon tokens, carbon emission tokens and carbon reduction tokens?

Carbon Emissions Tokens account for carbon emissions following Scope 1, 2, or 3 emissions. The CETs measure the GHG footprint in metric tonnes for each site and process of a company. 

Carbon Emission Tokens can be counterbalanced with varying types of Carbon Reduction Tokens including Removals, Verified Emission Reductions, Renewable Energy Certificates, etc., depending on the type and scope of the emissions.

What is the difference between cryptocurrency and tokens?

Cryptocurrency is a coin that is native to a public Distributed Ledger Technology (DLT) network, such as HBAR. Cryptocurrencies are often used to pay network fees or other utilities in a given crypto economy.

Tokens have a variety of use cases, but in most cases are fungible (like the US dollar, a cryptocurrency, or a common stock). This means any fungible token is indistinguishable from any other fungible token of the same type. A Non-Fungible Token may be part of a series or a class, but is unique in its own right, sometimes this is achieved via a serial number, but may also be a series of attributes.

Each token type can have a variety of use cases including tokenized assets such as real estate, art, or carbon reduction for NFTs or equal ownership shares for a fungible token.

For the Carbon Emission Token, this is an “Accounting Token” representing a GHG inventory or Carbon Emissions for a corporation which improves reporting transparency and sustainability measurements.

Are these (carbon) tokens different from NFTs?

Carbon Emission Tokens are used as a unit of account that can be publicly verified (and are not meant to be traded). Carbon Emission Tokens generally represent a site or a series of site emissions and are not unique per metric tonne.

Carbon Reduction Tokens, which have unique properties and are sometimes bought by many buyers for a single ‘carbon reduction’ project, are by definition unique to the metric tonne. These, in fact, would be Non-Fungible, but are quite different from some of the NFTs you would see with digital art or in many pop culture references. By having unique metric tonnes it allows for granular traceability and accounting for projects, with more transparency to verify attributes.

What is our partnership objective? Why is partnering with Hedera?

Avery Dennison Smartrac has entered a strategic partnership with the HBAR Foundation that focuses on utilizing Hedera, a leading distributed ledger technology platform provider, to enable new decarbonization use cases for while driving the adoption of digital ID technologies.

Part of the collaboration is the adoption of Hedera's distributed ledger technology (DLT) into the connected product cloud. customers now can access one of the most cost effective and energy efficient DLT/blockchain platforms and use that functionality to drive their decarbonization goals.

What are the top use cases enabled by this partnership that we are focusing on?

  • Enabling carbon accounting and tokenization for brands on the DLT to understand their carbon impact across the supply chain
  • Helping brands by offering additional carbon reduction measures to achieve net neutrality and move towards carbon net positivity
  • Leveraging DLT to bring credibility and transparency across all activities and transactions
  • Facilitating carbon reduction through the new online marketplace, powered by

Why is this going to be exciting for our customers?

Every AD customer who wants to use the platform can now access one of the (if not the most) cost effective and energy efficient DLT/blockchain platforms and use that functionality to drive their decarbonization goals including granular carbon accounting and purchasing credible, immutable, carbon reductions based on their actual supply chain data. 

How are the carbon emission and carbon reduction tokens calculated? Is there a third-party software platform calculating this?

Carbon Emissions typically are calculated using well known standards such as the Greenhouse Gas Protocol, EPA Emission Factors, and other established standards. uses open-source technology called “the Guardian” to manage transparent policies which digitize the process of these standards bodies so it’s easier to understand the steps in the process, the roles and actors involved in calculation, and the data produced with veracity.

For Carbon Reduction, calculations are made based on standards to account for Verified Emission Reductions, Renewable Energy Credits, Carbon Sequestration, Carbon Removals, amongst other types of credits. Each Carbon Reduction Token follows methodologies defined by the scientific community and implemented by a project. These projects use the Guardian to make it easy to see the process, roles (and actors), as well as the data produced to improve transparency and allow buyers to make informed choices based on access to this information.

Will there be a carbon accounting service offer as well? If so, how is that being supported?

Yes, has native functionality to enable real-time carbon accounting that is based on the GHG protocol using Hedera, which generates an “actual” carbon footprint accurate to a specific connected product (contrasted against typical LCAs, or Life Cycle Assessments, which often rely on model/hypothetical carbon footprint calculations).

How will brands be able to assign/issue carbon emission tokens and purchase carbon reduction tokens through the platform to achieve net neutrality?

Leveraging Hedera’s Token Services, will enable customers to tokenize their carbon emissions for immutable carbon accounting while facilitating a marketplace for customers to purchase auditable, highly credible reductions to support net-zero pledges.

How are these carbon reduction projects verified and audited on the ground for credibility?

Each project will have different processes, roles, and actions, depending on the project type, which will lead to different auditing organizations who build their reputations and credentials over time.

The Guardian’ which is implemented as part of the platform allows for visibility into data and key stakeholders who can view this information on Hedera. 

Are there other non-crypto platforms or providers for such decarbonization use cases, which are non-crypto/DLT based? What makes DLT important?

There are different non-DLT/non-crypto platforms providing decarbonization use cases. However, there can be an element of lack of trust and transparency due to the risk associated with the mutable nature of non-DLT platforms.

By avoiding intermediaries, distributing control of the ledger, and providing a tamper-apparent network, DLTs present a more cost-efficient, accessible, and reliable transaction platform than centralized ledger systems.

Carbon Reduction, Removal, and Reduction on Hedera leverage an open-source technology called the Guardian. The Guardian solution allows for environmental project developers to map methodologies and the roles within the methodology to actors with identifiers on a public ledger in a digitized fashion. By having these processes (methodologies) and roles (and their corresponding actors’ identifiers) on the ledger, this allows for complete transparency on data and subsequent collection and calculations made based on that data, which improves trust in the policy and environmental projects. Today, environmental processes are mostly opaque due to permission-based applications or data silos.

When assets are tokenized such as carbon reductions and removals on Hedera following the Guardian process, it allows us for the first time to see the relationship between the exact traded asset (in metric tonnes of C02 or its equivalent) tied to the audit trail in a discoverable way at scale. This allows for a naturally decentralized project which today involves registries, auditors, environmental consultancies, verifiers, labs, and devices to all be mapped and participate in the value chain in an equitable way, representative of their role in the process while maintaining transparency and trust.

Why have we chosen to go with Hedera for carbon emission and reduction tokens?

Offering lower costs per transaction, shorter time to settle transactions, and lower energy requirements to operate the network, Hedera appears well-positioned to help scale enterprise DLT opportunities/use cases.

Hedera is by far the most efficient and environmentally friendly ledger. In fact, it is more efficient than even Visa for processing transactions. Additionally, the Hedera Governing Council has made the decision to counterbalance the carbon footprint of the network, so every transaction on the Hedera network is carbon negative.

What other platforms are providing these reduction tokens or marketplace?

Many platforms exist as small markets outside of Hedera. However, these markets are often silos of their own with bespoke methodologies, a lack of transparency of the audit trail or the absence of one linked ledger. By leveraging Hedera and the ecosystem of environmental project developers, we’re able to coalesce around open and transparent market standards without the concerns about the lack of an audit trail.

How does this offering compare to KlimaDAO, Toucan, and BCT (Base Carbon Tonne)?

Although both BCTs and the Hedera Tokens are tokens, they are quite different. Offerings such as KlimaDAO, Toucan, and their BCT (Base Carbon Tonne) “retire” credits from registries such as Verra and Gold Standard and re-issue them on a ledger. This method of retiring has been criticized by the registries that create the credits after retirement. This also neglects any and all auditability of the asset itself, which has double-counting considerations and concerns.

From a transactional perspective, this has been compared to “selling a meal after eating it,” although since it is currently being traded its value is solely speculative and has no environmental benefit. Per Verra, a large registry that certifies credits, “considers that no person has any further rights to take the benefit of the canceled or retired VCUs or the underlying environmental benefits corresponding to such VCUs”.

This is highly different from an asset that is natively on a ledger tokenized via the Guardian with an audit trail attached to the tokenized credit.

Which industry segment will derive the most value from it?

It’s equally applicable to all industry segments. However, our core market segments of Apparel and Fashion, Retail, Food & Drinks, Beauty, Agriculture, Automotive, Logistics, and CPGs, are all going to derive great value from this solution as they accelerate their approach toward decarbonization and net neutrality.