IBF Net and Yayasan Dana Wakaf Indonesia (Foundation for Islamic Endowment Funds Indonesia), popularly known as Green Waqf Indonesia have entered into a landmark agreement under which IBF Net will create a digital portfolio out of green assets like trees planted by the latter on waqf land in Indonesia, convert the carbon savings from these trees into green cryptos. These cryptos reflecting real values to the economy will then be traded on the Impact Exchange created by IBF Net on the blockchain. The proceeds from the sale of the green cryptos will be channeled into fresh plantations.
The Agreement was followed by a field visit by both the teams to the plantation location in Bogor, Indonesia where Green Waqf is planting about 10,000 tamanu trees in 100 hectares waqf land, 50% of it under management of well known Muhammadiyah organisation, and the rest is by various non-profit organisations.. “It is important for us to be on the ground to witness the actual process of plantation and understand the economics and environmental impact of this experiment. Islamic economics is about real economy and Islamic cryptos must capture and reflect real values for the economy”, says Dr Mohammed Obaidullah, Founder, IBF Net.
Measuring Real Value
How much real value a fully-grown tamanu tree brings to the economy? A series of highly educational videos produced by Green Waqf Indonesia explain this so well and leave nothing to speculation. Tamanu trees reduce co2 in the air in two ways. First, every time biomass production goes through the photosynthetic process, plants absorb co2 as the main raw material along with water for this process. A mature tamanu tree with 100 kilograms of biomass production per year absorbs about 220 kilograms of co2 in the same year in addition to the general production of biomass such as other trees for the growth of stems, twigs, leaves and so on.
The tamanu tree also produces fruits which contain high oil that can be used as a substitute for diesel from fossil fuels. There is a further reduction of co2 which occurs due to the replacement of fossil fuels by tamanu biofuel. Mature tamanu trees which can produce 50 litres of biodiesel per year will contribute to a reduction in co2 of 144 kilograms per year. The combination of both forms of reduction stands at around 300+ kilograms of co2 per year, compared to just about 20–50 kilograms of co2 savings per year in case of typical fully-grown trees. The financial equivalent of such benefits in the form of savings in social costs are estimable according to well-accepted methods, according to Ir. Muhaimin Iqbal, Founder, Green Waqf Indonesia. “Based on years of research into various plantation alternatives, we have identified tamanu as one that can provide maximum social benefits in addition to financial benefits in various forms through sale of by-products for the waqf”, says Ir. Muhaimin Iqbal. Green Waqf is targeting around 14 million hectares of land in Indonesia for such plantation, which otherwise cannot be subjected to any kind of cultivation.
The issuance of green cryptos is based on measurable social benefits from each tree that now has a unique digital identity. The cryptos allocated to a project on-chain, now available for sale on the Exchange, may be purchased by existing or future projects with low “impact scores” to improve the same. Projects can now rebalance their risk-return-impact profile. As an aid to investment decision-making, these scores are produced by Islamic Value Analytics PLT, a joint venture set up and led by IBF Net. “We are also working on another type of green security token with a huge potential for raising long-term resources directly from the impact-investor community for tamanu plantation projects. While the economics of such projects works out great, we need regulatory approval for such issuance. Indeed, the success of this maiden project can open the floodgates of such green initiatives, especially on large tracts of waqf lands across the globe, undeveloped and devoid of any recurrent earnings, says Mohammed Alim, CEO.
