Liverpool was going to become the world’s first ‘carbon positive’ city. What went wrong?
Blockchain, ‘threatened’ Peruvian forests and a wad of cash for a fat lot of nothing
By Matthew Hughes
Back in 2018, Liverpool City Council announced a lofty ambition: it would become the world’s first “carbon positive” city by 2020, with help from a technology known as blockchain. They would do this in partnership with a little-known startup — the Poseidon Foundation — tracking the city’s carbon emissions. If this wasn’t enough, this project would help protect vast swathes of highly biodiverse Peruvian forest in the process. Given all this, you might think that only someone truly heinous — a hater of biodiverse Peruvian trees, say — could have had any problem with this venture. So why was the response from Liverpool’s tech community so overwhelmingly negative?
At the time all this was announced, I was working as a staff writer at The Next Web — a leading global tech publication with millions of monthly readers, an editorial staff spread across three continents, and an annual conference attended by tens of thousands of technology industry professionals. My working day was punctuated by hundreds of emails from publicists trying to convince me to write about their clients. Many had some sort of blockchain angle.
Although my beat didn’t cover crypto or blockchain, these pitches nonetheless prompted eye-rolling on my part. By 2018, blockchain technology was increasingly tainted by the spectre of fly-by-night cryptocurrency scams designed to part hapless retail “investors” from their hard-earned money, or half-baked startups that used blockchain as a way to differentiate themselves from their competition without any thought of whether it made practical sense. Often, the two would collide. Someone would propose an idea of a product that used blockchain in an unusual way, raise money from the general public through an ICO (like a share sale, but without the regulatory rigour and oversight), and then take the money and flee.
In essence, blockchain had become toxic. Although the technology had (and still has) its vocal cheerleaders, their impact was blunted by news of scam after scam. If you worked in tech, you would have probably witnessed the countless failures of once-promising startups that just didn’t have a viable business model. So it was perplexing that a legitimate governmental body, Liverpool City Council, wouldn’t just embrace it, but would go on to effectively endorse it.
The Post has been looking into this strange saga for the past few months, trying to make sense of it. What we’ve found is a council pumping taxpayers’ money straight into a scheme that promised things it seemingly could never deliver, and whose ambitions — according to industry insiders — were never even remotely realistic. Back in 2018, the Poseidon Foundation promised that their new project would not only help reduce our climate impact, but simultaneously play a helping hand in saving a threatened Peruvian national park. But that was a long time ago: half a decade has passed since then. Nowadays, the project has been almost entirely forgotten.
The adventure begins
The Poseidon Foundation, then based in Malta, described itself as a nonprofit that used blockchain technology to track the environmental impact of an organisation, and then offset it by purchasing carbon credits — a kind of financial instrument that allows organisations to offset a specific amount of CO2 emissions by contributing to projects that plant new trees, or preserve existing at-risk forests from human activity, or fund new renewable energy projects.
This is complicated stuff to the layman, but essentially, by using bleeding-edge technology, the council hoped it would balance out the climate impact of its vehicle fleet, its electricity bills, and the heating of city-owned properties.
But for this story — and, indeed, the ire of Liverpool’s tech community — to make sense, you must first understand the blockchain. It’s a concept that’s often linked with cryptocurrencies like Bitcoin, and for good reason. After all, blockchains as we currently know them were first defined in the Bitcoin whitepaper, published by the pseudonymous Satoshi Nakamoto in 2008 and building on earlier cryptographic research.
And yet, cryptocurrencies and blockchains are two distinct things. The former refers to the highly speculative tokens and coins hoarded and traded by so-called “investors,” whereas the latter describes the tool used to record and conduct transactions. It’s the difference between your bank account and the systems your bank uses to register your balance, conduct transactions, and process card payments.
For a fleeting moment, blockchains were touted by technology industry blowhards as a way to build systems — particularly financial systems — that were both transparent and decentralised, without the oversight or control of a single government or institution. Unlike traditional databases, blockchains have several distinct characteristics. The most important thing is that all transactions are immutable. Records cannot be deleted or changed after the fact. If you bought a Bitcoin in 2011, the blockchain still remembers — and will remember as long as it exists.
Another key factor in the allure of blockchain technology is the fact that it allows for decentralised systems, where no single person has absolute control. With Bitcoin, for example, anyone can create a “node” that validates the legitimacy of each transaction, meaning anyone can be part of the plumbing that allows money and data to flow. Another blockchain feature (distributed ledgers) gives anyone the ability to observe transactions between participants in the network, giving an element of transparency that otherwise wouldn’t exist in traditional systems.
There’s a certain irony here. The blockchain — at least, in theory — is to allow for levels of transparency that were otherwise impossible. And yet, Liverpool City Council has been less than forthcoming about the details of this engagement, with much of the information only obtained through FOI (Freedom of Information) requests, public records, and a forensic analysis of Poseidon’s online footprint.
Indeed, in our investigation we have failed to uncover any evidence that the blockchain solution deployed by Liverpool City Council used these transparency features, or if it did, publicised them to anyone beyond the council and its external partners.
In a statement to The Post, Liverpool City Council said:
“The partnership with Poseidon Foundation was based on a climate-change policy of a previous administration. The investment made, which came from the former Mayoral Fund, is not an approach the current administration would support. Liverpool City Council’s aim of achieving net-zero status is now very much focused on decarbonising its operations, rather than by off-setting, such as LED street lighting, on-street electric charging, installing more active travel infrastructure and greening up the city.”
But what they lacked in transparency, they more than made up for in lofty claims. According to the council’s own documents, its partnership with Poseidon would protect 136,000 trees in the Peruvian Amazon. While it doesn’t specify which specific carbon offsetting project this involves, media coverage of Poseidon published in early 2018 claimed that it had committed 80% of the funds it had already raised to the Cordillera Azul National Park: a vast 1.35 million hectare region located in the Peruvian Andes noted for its fragile biodiversity.
When the project was first announced, Adrian McEwan, who co-founded local tech space, DoES Liverpool, asked his Twitter followers whether it was a belated April Fool’s joke. In an email to this publication, he said he felt like the announcement was “typical” of the city’s relationship with technology and the local technology industry — a “grand-sounding announcement that claims we'll be the best or first at something” but “fails to stand up to scrutiny.”
Involvement in these kinds of projects, he added, “undermines [Liverpool Council’s] credibility” and makes it harder for local technologists to engage with the city to “solve actual problems and engage with councillors and officers who have a clue.”
He wasn’t the only one who felt this way. Speaking to the The Post, Andrew Bolster, co-founder of Belfast’s Farset Labs and Liverpool University Ph.D. candidate at the time, recalled feeling that the announcement was a cynical “PR game” rooted in tech utopianism and ignorant of the limitations of blockchain technology.
Those were some of the kinder appraisals I heard. Julian Todd, co-founder of pioneering Liverpool data science startup ScraperWiki (which has since rebranded as the Sensible Code Company and moved to Belfast — and where I briefly interned in 2012) described feelings of outrage over what he perceived as a vanity project that diverted attention from a serious existential crisis. “The need to act on the climate crisis is so severe and immediate that any time wasted on projects that have no prospect of making a difference is both immoral and unforgivable,” he said.
A Black Box
An obvious question at this point would be how much did this venture cost the council? The figures aren’t huge. Documents obtained by The Post shows two payments related to the Poseidon Foundation partnership: £3,000 to reimburse Poseidon for “verification” of the council’s carbon footprint by the Carbon Trust, plus a further £80,795 to be used to “make the council climate positive for 1 year.” This is a drop in the ocean in the context of the many wasteful investments undertaken by the council around this time. But it does tell us something about the kind of practices that were involved in pursuing investments.
In the context of 2021’s Caller Report — that examined large numbers of council investments from this era and identified an unmistakable pattern of failure to secure Best Value for the city — it’s perhaps not surprising that Poseidon raised eyebrows. But even if you view it as a well-meaning but doomed attempt to adopt an innovative technology, the lack of due diligence, explanation and curiosity is alarming.
It’s unclear, for example, how Poseidon’s solution actually worked, and where the blockchain element comes in. Public disclosures from the council (and indeed, from Poseidon themselves) provide little technical detail. It seems to speak to a pattern at the council during that era: wading in on projects without asking the difficult questions.
An archived (and since deleted) version of Poseidon’s white paper, published around the time of its 2018 token sale — a way to raise funds by selling crypto assets on the open market — talks extensively about the evident need to tackle climate change, its leadership team, and its business model, but sheds little light on the mechanics of the operation.
The few details provided are expressed in the vaguest of terms. It notes that an organisation’s carbon footprint is measured by a Poseidon-built product called Footprint-AI, but doesn’t explain how. That, by itself, is curious, as by 2018 several standards for environmental auditing had emerged. These include the British PAS 2050 standard, the GHG Protocol Product Standard, and the global ISO 14064-1 standard.
It’s unclear whether Footprint-AI complied with either of these, or indeed, with any other recognised standards. While the council’s carbon footprint was verified by the Carbon Trust, this isn’t the same as an audit, which implies a level of investigation and interrogation. By contrast, verification focuses primarily on ensuring robust data-collection and reporting methods.
The Poseidon solution would then calculate the best offsetting option for the customer using a product called Offset-AI and, using its own Poseidon-issued tokens, purchase carbon credits in a given emissions project. The customer would then receive a certificate of their purchase. Again, it’s unclear how Offset-AI actually worked, and the criterion used to select offsetting projects.
The carbon offsetting industry is a dark, often unregulated space where players can make bold claims without having to necessarily demonstrate their validity. This fact is demonstrated from a recent study from Cambridge University and VU Amsterdam and published in the journal Science. The researchers examined several major carbon offsetting projects and found that of the 89 million credits issued, only 5.4 million (or six percent) were linked to real-world forest preservation efforts.
According to documents obtained by The Post, representatives for the council interviewed Poseidon to “[verify] the validity of their product.” These included several unnamed environmental advocates for the council.
Further due diligence was performed by Weightmans, a UK-wide law firm with a presence in Liverpool, which reportedly identified no red flags.
And yet, the extent of that investigation process remains unclear. The same document lists just one alternative to Poseidon: “do nothing,” which it rejected as untenable given the urgent need to address climate change, and the council’s own environmental goals. That alone is curious, as even by 2018, there was an existing (and thriving) climate audit industry working in both the private and charitable sectors. Many — if not most — of these practitioners adhered to the existing standards mentioned earlier, ensuring a level of scientific rigour and formality. A level clearly not existent in this endeavour.
Saving the planet
As a technology journalist, I know that so much of what we report on is subjective. Whether a product is good often comes down to one’s needs, preferences, and attitudes. The iPhone or Android debate is a matter of personal taste. But whether a thing ultimately works is often something we can empirically measure. So, did the council manage to offset its climate footprint?
Based on statements by the council (which refers to “protecting 136,000 trees in the Peruvian Amazon as a means to offset carbon emissions”), and early coverage of Poseidon and its other partnerships (including with ice cream giant Ben and Jerry’s), it’s likely this council bought carbon credits in the Cordillera Azul National Park. At first glance, this seems like a sensible and popular choice, with even oil giant Shell and TotalEnergies buying credits. But this project is not without its controversies. Nor, for that matter, its questions.
In 2008, CIMA (the non-profit responsible for preserving and managing Cordillera Azul National Park) began selling carbon credits to government and private sector entities seeking an easy way to offset their greenhouse emissions. This project has proven incredibly lucrative for CIMA, which sold over 25.2 million carbon credits between 2008 and 2018, with the funds used to pay for forest patrols and anti-deforestation education.
And yet, the sale of these credits has failed to stop — or even slow — the rate of tree loss in the Cordillera Azul National Park. A 2023 investigation from the Associated Press (AP) cites data from Space Intelligence, which, having analysed satellite imagery, found that the rate of tree canopy loss accelerated from 262 hectares per year in the five years before CIMA began selling carbon credits, to 572 hectares per year in the period between 2009 and 2021.
Although CIMA insists that any tree loss occurred as a result of natural phenomena (specifically, landslides), it’s far more likely that human activity is responsible. Speaking to the AP, a representative from Space Intelligences points out that areas closest to population centres witness vastly higher rates of tree loss compared to remote areas. This suggests the presence of illegal logging and agriculture activities. Per the AP report:
Inspection of satellite data does show many landslides, but deforestation is a major cause of landslides because tree roots help hold steep slopes in place. Academic modelling has found landslides happen up to 13 times more often in deforested areas. It’s impossible to know what caused the Cordillera Azul landslides without site inspections, but forest loss within 1 kilometre (0.6 mile) of a park boundary or rivers — the most accessible and logging-vulnerable areas of the park — was about double that of the rest of the park, Space Intelligence found. More than a third of all the tree loss mapped in the gigantic park was in these narrow bands of territory.
Other critics — including Friends of the Earth Netherlands — have accused CIMA of overstating the environmental benefits of its offsetting program. They accuse CIMA of producing highly exaggerated population growth projections in order to inflate its deforestation estimates (higher populations of course mean greater demand for housing and farmland). Friends of the Earth Netherlands further accused CIMA of distorting the impact of its carbon offsetting program by over-representing regions that were inherently more vulnerable to logging, specifically the lowland valleys and floodplains preferred by farmers.
By allegedly exaggerating the risk of deforestation, CIMA has created a sense of urgency that otherwise wouldn’t have existed. Friends of the Earth Netherlands quoted a United States Agency for International Development (USAID) report from 2013 which said that illegal logging in the park was “completely eradicated” from its five most vulnerable parts by 2006, and by 2008, the last remaining farmers were relocated in a “consensual and peaceful manner.”
In short, it created a threat that never really existed. And yet, at the same time, it has largely failed to protect the park from deforestation, which continues to accelerate — although, not at the rates projected by CIMA. Indeed, Friends of the Earth Netherlands pointed out that much of the park is “very unlikely to be deforested in any plausible scenario” due to its challenging mountainous terrain, which makes it virtually inaccessible for illegal logging and agricultural activity.
While it’s not confirmed that Liverpool City Council purchased credits for this specific project, given the previous statements from Poseidon and the council, it’s highly likely. And — regrettably — they’ve likely done little to offset the council’s environmental impact. At best, the credits are “protecting” areas that were never at risk to begin with. At worst, the money — and that of other organisations which have bought into the project — has failed to protect the park’s most vulnerable periphery, and deforestation continues — albeit at a fraction of the rate projected by CIMA.
Perhaps it’s worth reflecting on the historical context this saga sits within. Liverpool has a proud, often overlooked history as a hub of tech innovation and entrepreneurship. In the 19th century, the city’s strategic position as a logistics hub created fertile ground for new breakthroughs in transportation, most notably Stephenson’s Rocket — an early steam locomotive design that paved the way for trains that could haul heavier loads further and with greater efficiency. Then in the 1980s and 1990s, Liverpool emerged as a significant player in the video games industry. Although bitterly short-lived, studios like Rage Games, Imagine Software, and Psygnosis exert a lasting influence in the digital entertainment space.
And while Liverpool’s place on the tech world map is overshadowed by global hubs like London and San Francisco and regional players like Manchester, the city continues to produce successful and innovative tech companies like vTime and Lucid Games. In early 2022, Sony Interactive Entertainment opened a vast, glittering office in the Liverpool Echo’s former Old Hall Street building, continuing a relationship with the city that has existed for decades.
But technological entrepreneurship requires a certain starry-eyed philosophy, defined by a belief that if you move fast enough, and you break enough things, change — real, positive change — will come. While this has been true for every epoch in tech history, it was even more so when it came to the blockchain craze of the mid-to-late-2010s.
It’s perhaps understandable that the council embraced the nascent and unproven technology. Agreeing, Bolster said: “The inclusion of 'Blockchain' at the time was generally silly but unfortunately far from unusual at the time. It just screamed that someone at the council got blinded by techno-utopian mumbo jumbo by someone who provided a solution to one of the great challenges we still haven't tackled today: how to reduce humanity's climate impact without inconveniencing anyone.”
So where are all the key players in this tragicomedy now? While Joe Anderson — a vocal cheerleader for the partnership, and the man who signed the deal — is no longer the elected Mayor of Liverpool, the Poseidon Foundation is still around. In the years following its deal with Liverpool City Council, it decamped from its Malta base and moved to Singapore, where it began working on a service to reduce employee churn through “gamified ESG engagement,” where employees are encouraged to be more environmentally-conscious by playing games. This product, notably, makes no mention of blockchain technology.
And it has since pivoted again, with its website claiming the organisation — now known as Poseidon Impact — is working on an unspecified (and undescribed) ESG tool for corporations and large entities. Again, with no mention of blockchain.
In fairness to the council, in the wake of this episode two councillors — Laura Robertson-Collins and Lena Simic — put forward a motion to oppose overseas off-setting going forward. This went to the Climate Change Select Committee and was agreed.
As someone with a decade-long career in the technology industry, I’m no stranger to witnessing companies change direction abruptly, shifting their product focus to better address market realities. Still, Poseidon’s abrupt changes of course are curious, especially considering the startup’s ambitions weren’t limited to one medium-sized city in the North of England.
An archived copy of its website from May 2019 describes Liverpool City Council as a “strategic partner” that is helping the company “develop a 'city-model' for climate change” with its technology at the heart. It’s more than a little strange that, in the course of a couple of years, the company went from engaging with large local governmental bodies and global brands to experimenting with apps designed to encourage office workers to act “greener.”
But is it any wonder that Poseidon abandoned its original strategy, given what played out here? It appears as if the Poseidon Foundation has likely failed to make any meaningful contribution to reducing our carbon impact, rather spending roughly £83,000 — or the council tax payments of nearly 70 Band A properties in 2018 — and a lot of time achieving nothing at all.