Several organizations have been using blockchain technology to address the damaging environmental impacts of mining, in a method called carbon offsetting. Carbon offsetting involves buying carbon credits to offset carbon dioxide (CO2) emissions, with each carbon credit offsetting a metric ton of CO2. The money is typically used to fund actions that remove the same amount of CO2 that is emitted, such as building solar or wind farms or preserving forests. Carbon offsetting can contribute to sustainable development if properly executed. Blockchain technology can make the carbon market more transparent, accessible, and liquid. A blockchain-based carbon market would have metadata proving the origin and quality of each carbon credit and would be highly regulated, avoiding the downsides of the largely unregulated voluntary carbon market. Smart contracts on the blockchain can store metadata about carbon credits and enable swift, transparent, and trustworthy information exchange among network participants. Several blockchain-based carbon credit issuers exist, including ClimateTrade, CarbonX and IMPT. ClimateTrade and IMPT use blockchain technology to enable individuals and companies to offset their carbon emissions transparently. CarbonX creates investment for carbon offsetting projects via its private blockchain. Although carbon offsetting using blockchain technology remains a novel concept, it can offer greater transparency and trust to the core problems in carbon markets. However, regulatory bodies must agree on blockchain standards to ensure on-chain integrity. They must also determine the creation, valuation, representation, and other relevant details of digital carbon credits.
The restructuring capability of blockchain and the concept of carbon credits.
Blockchain technology is being used to create a more transparent and efficient carbon credits market. The global carbon credit market...