The Role of Blockchain in the Carbon Market

The rise of global carbon dioxide levels has called on governments and businesses to limit how much carbon emissions they produce over the succeeding years. There have been several international agreements which address this issue, specifically, the Paris Agreement has been the most notable, as it established international compliance through carbon markets.

But what exactly are carbon markets? The idea behind them is to combat carbon emissions by providing specific industries with an “allowance” for each tonne of carbon dioxide they emit annually, known as carbon credits. One carbon credit equals one tonne of carbon dioxide reduced, sequestered or avoided. Companies with reduced carbon emissions can sell their excess carbon credits to participants who have increased emissions— forming the carbon market.

However, there can be a lack of transparency and quality control within these markets, which is why blockchain technology could be used to improve the integrity and accessibility of carbon markets.This technology can streamline and accelerate the carbon market digitally, allowing organizations and individuals to meet their carbon footprint reduction goals much sooner.

It may seem as though only larger industries, businesses, and organizations can benefit from these markets, however, individuals and smaller companies are able to as well. Companies have already established carbon markets in support of regenerative agricultural practices that perform as carbon removal solutions. Land management practices and crop data are assessed to determine the impact of a farmer’s regenerative practices, which provides credibility and transparency to how much carbon can be removed per contribution. Through the reliability of the blockchain system, the carbon market is sure to flourish, granting more people the freedom to make a positive environmental impact.

The Role of Blockchain in the Carbon Market

Written by Sophia Logan for microbiometer.com