Blockchain technology is being used to create a more transparent and efficient carbon credits market. The global carbon credit market is expected to reach $2.4 trillion by 2027 with two markets existing: voluntary and compliance. The voluntary carbon credits market lacks transparency causing trust issues. However, blockchain platforms provide greater transparency to create greater trust in the market. UK-based Carbonplace raised $45 million and uses distributed ledger technology to provide a settlement network for carbon credits, ensuring the simultaneous transfer of ownership of credits and payment. Turning credits into tokens, the World Bank’s International Finance Corporation plans to create a fund to encourage capital to trade carbon credits which will be tracked by the World Bank’s “Climate Warehouse”. Limitations of implementing blockchain into carbon offsets include the inability to verify claim longevity and the genuineness of the emission reductions. Trust issues are raised as zombie projects find their way to blockchains. Despite the concerns, the founding of blockchain-fuelled carbon trading in Indonesia with Metaverse Green Exchange and the WWF and BCG Digital Ventures partnership to avoid illegal, environmentally-damaging or unethical goods suggest that blockchain technology can solve transparency and trust issues within the carbon credits market. The success of a new carbon credit trading platform/marketplace depends on the quality of the data used. Blockchain technology offers a promising solution to the problem of transparency, but ultimately, agreed worldwide standards need to be established for projects that qualify to receive carbon credits based on the impact on reducing carbon emissions.
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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...
