Several startups including Toucan, Return, Topl, and Open Forest Protocol are exploring new ways to use blockchain technology to improve the transparency and reliability of carbon credits. Carbon credits allow companies to offset greenhouse-gas emissions generated by their activities by purchasing credits that go towards various environmental initiatives. However, doubts remain as to whether the initiatives are effective and if they meaningfully reduce carbon emissions. It’s clear that greater transparency is needed in carbon markets, and blockchain technology could hold the key.
Using blockchain technology could bring together various groups to evaluate a project’s merits, incentivize their participation, and lay out the criteria used to generate a particular credit. The blockchain system can also prevent the same credit being issued to more than one company and improve the data-collection process’ rigor. Initially, the climate industry resisted using blockchain technology, but after early resistance, even standard-setting organizations such as Verra and Gold Standard are exploring the technology. Gold Standard is working with several startups to develop a set of standards for blockchain-enabled credits.
In conclusion, by improving the transparency and reliability of carbon credits, blockchain technology could revolutionize the way carbon markets operate. Startups are already exploring ways to use the technology to provide transparency to the carbon-credit markets, bringing together different groups to evaluate a project’s merits and incentivizing their participation. As more established organizations begin to explore the idea, the potential for blockchain-based carbon registries is significant, paving the way for more effective climate initiatives.
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It is important that carbon credit schemes also benefit local communities.
The World Meteorological Organisation has stated that 193 countries have given unanimous backing to a scheme to monitor global greenhouse...
