A response from Paul Rowett, co-founder of Toco: “Redesigning Market Systems to Drive Climate Action”
“A rebuttal to REDD-Monitor’s critique of Toco.”
In February 2025, REDD-Monitor wrote about a company called Toco, which has created a digital currency backed by carbon credits. Download the app, create a wallet, buy some tocos, and carry on consuming. According to the company’s website, that’s a way of taking “climate action today”.
My main criticism of Toco is that it does nothing to address the main driver of the climate crisis: burning fossil fuels. To address the climate crisis we have to stop burning fossil fuels. Instead, Toco presents a false solution that helps ease guilt, distracts consumers from making important changes such as stopping flying or going vegan, but does nothing to reduce emissions from burning fossil fuels.
On 23 April 2025, Paul Rowett, co-founder of Toco, left a comment following the post on REDD-Monitor. “There is a lot that I would like to say in response to your article,” he wrote.
Rowett sent the following response yesterday, which is posted here in full and unedited.
His response makes no mention of fossil fuels. In fact it avoids most of the criticisms that REDD-Monitor levelled at Toco. And it raises several issues not mentioned in REDD-Monitor’s critique such as whether Toco is a “speculative crypto scheme or even a Ponzi setup” and whether the retirement of carbon offsets is important or not.
I’ve sent some questions to Rowett focussing on the criticisms I made in the original post and look forward to posting his replies in due course.
Redesigning Market Systems to Drive Climate Action
A Rebuttal to REDD-Monitor’s Critique of Toco
– by Paul Rowett (co-founder of Toco)Introduction
The carbon markets are facing a crisis of confidence. Years of weak incentives, poor-quality offsets, and fragmented standards have left the public — rightly — skeptical of claims that these markets can drive real change. At the same time, the emergence of blockchain-based climate solutions has introduced a new layer of confusion, hype, and mistrust. In this environment, it’s easy to dismiss innovation as just another speculative play.
But not all ideas should be painted with the same brush. Toco was built in response to these very failures — to offer a credible, transparent, and regulated alternative to the status quo. It is not a speculative asset. It is not a new crypto coin. And it is certainly not a patch on a broken system. Toco is a new kind of currency, fully backed by high-integrity carbon mitigation assets, designed to channel everyday economic activity into measurable climate impact. It’s a solution grounded in real assets, rigorous risk assessment, and public accountability.
This article responds to recent critiques by explaining the logic, safeguards, and real-world application of Toco. We clarify the mechanics and show how this model not only avoids the traps of the past but actively solves them.
Not Speculative – Real Assets, Real Value
Critics have questioned whether Toco is just another speculative crypto scheme or even a Ponzi setup. The reality is that every unit of Toco (equivalent to one tonne of CO₂) is fully backed by real, verified carbon mitigation assets. When someone purchases Toco, their funds are used to buy high-quality, verified carbon credits from the voluntary carbon markets. These credits are then placed in a centrally managed, risk-adjusted reserve operated by The Carbon Reserve, a non-profit foundation based in Geneva, Switzerland.
Unlike speculative tokens, Toco is governed by stringent regulatory oversight (regulated by FINMA in Switzerland and preparing for MiCAR compliance in the EU). Its asset-backed structure ensures that value is derived from tangible environmental outcomes, not financial engineering. There are no promises of unsustainable returns, because Toco is a currency — a medium of exchange — not an investment product.
Holding vs. Retiring Credits – Integrating Carbon into the Economy
A central misunderstanding concerns the retirement of carbon credits. Critics argue that unless credits are retired immediately, they have no climate impact. This binary view fails to consider a fundamental innovation: carbon mitigation can be held as an economic asset with real utility.
The voluntary carbon market’s overemphasis on retirement has led to price suppression and an oversupply of low-quality credits. Toco offers an alternative: credits backing the currency are held in reserve and remain active in the financial system, continuing to represent their environmental value. By doing so, Toco ensures that carbon mitigation is embedded into everyday transactions — a long-standing goal of economists seeking to internalise negative externalities.
Users and merchants alike may still retire their Toco to permanently offset emissions, but until then, these credits back a currency that stimulates ongoing demand for climate action. This is akin to a gold standard: the gold remains in the vault, its presence underpins the currency’s value.
A Risk-Managed Carbon Reserve – Quality Assets and Market Stability
Toco is issued by The Carbon Reserve, which manages a diversified portfolio of carbon credits. This model directly addresses the structural weaknesses identified in the carbon markets, including market fragmentation, liquidity constraints, and widespread concerns about credit integrity.
By pooling carbon assets from multiple sources, sectors, and jurisdictions, the Carbon Reserve reduces concentration risk, enhances liquidity, and provides price stabilization. The centralized reserve acts as a price buffer, absorbing oversupply and maintaining a balanced market.
Crucially, The Carbon Reserve implements a risk-based integrity framework. Rather than treating all credits equally, it assesses them across dimensions like additionality, permanence, leakage, and verification standards. Lower-quality credits are discounted; those failing minimum standards are excluded entirely. The result is a tiered, transparent system that offers users confidence in the quality of carbon assets behind every Toco.
Real-World Utility and Compliance – Already Making an Impact
Toco is not theoretical. It is live and in circulation today. More than 70 retailers across Switzerland and Denmark accept Toco for everyday purchases. This includes cafes, grocery stores, and service providers. Users transact with Toco as they would with any digital currency—but with the added benefit of knowing each Toco supports carbon mitigation.
Compliance with financial and environmental standards is central to Toco’s design. With regulatory oversight in Switzerland and pending MiCAR alignment, Toco demonstrates that climate finance can operate within — and benefit from — the rules that govern trusted financial systems.
Building Trust and Moving Forward in Climate Finance
REDD-Monitor’s skepticism is not unwarranted. The carbon markets have lost credibility, and many blockchain-based climate projects have lacked substance. But Toco is different. It is structured precisely to address these shortcomings. Our pooling model strengthens liquidity and diversification. Our risk-based framework protects integrity and transparency. And our working, regulated, user-driven model proves that climate finance innovation can be real, measurable, and trustworthy.
We welcome debate. We invite scrutiny. But we also believe it’s time to move beyond blanket criticism and toward better systems. The climate crisis is urgent, and we cannot afford to let cynicism paralyze action. Toco offers one way forward — not perfect, but practical, proven, and ready to scale.
Let’s work together to ensure that climate finance is grounded in trust, transparency, and impact.
Great job to elicit a response from Rowett. You are of course correct, none of these carbon offset games address the fundamental that we must stop burning fossil fuels. Tragically, that is not going to happen until EROI for oil breaks.
“carbon mitigation can be held as an economic asset with real utility.”
“The voluntary carbon market’s overemphasis on retirement has led to price suppression and an oversupply of low-quality credits.”
Look, my dears, you can’t have it both ways. Either the one-tonne of stored carbon offsets an emitted tonne, or it doesn’t. If it is held in reserve, then its value its determined by its incremental additional carbon sequestration over time, which is a small value. A carbon credit held in reserve has no value to the financial system unless it is consumed as an offset. It has a value only to nature and the Commons, which can’t be monetized. This illustrates the problem of “creating a numerical value for every observable entity. What is the value of a tree? It has an intrinsic value to itself, and to its biosphere and larger diffuse values to all life on Earth. Yet some people try to assign a numerical value to that tree so that numerical value can essentially be stolen and placed in a column of their spreadsheet. If it is entered in the credits column, its value can supposedly offset some liability in the debits column, even though that liability might be valued on an entirely different set of standards. That numerical value is deemed stolen because it is extracted from the tree’s intrinsic value and essentially patented by the thief so that nobody else can extract that same value from that tree. And they lack proper authority to steal that value - no human-appointed arbiter can offer that authority legitimately. Again, this theft of an abstracted numerical value from an entity with intrinsic value presumes to negate responsible empathy for the entity itself. The business mind wishes to numerate everything in its world to create an illusory overlay of an economic reality in order to restructure its profit system with complete disregard for the consequences to others. That brings a moral crisis to the values crisis.” (from https://kathleenmccroskey.substack.com/p/the-deceit-of-progress)
“… a long-standing goal of economists seeking to internalise negative externalities”
As I have previously noted, the Economy is an externality to the environment, not the other way around. Gold is a physical property in one’s possession; the carbon stored in a tree is part of the commons until stolen and privatized. This is grand theft. “each Toco supports carbon mitigation.” Only in your imagination. Are you confusing carbon mitigation (whatever that is) with climate mitigation? Your “pooling model” reminds me of CLOs - collateralized loan obligations, with various credit-ratings assigned to the various tranches, and that market is near collapse from over-leverage.
All monetizations of Nature are part of the neo-liberal scheme that prioritizes the Market’s supposed ability to solve environmental crises as opposed to thoughtful, science-based government regulation.