By the end of the century, the planet’s temperature might increase 4.4 degrees Celsius based on the trajectory of carbon dioxide (CO2) emissions. Communities all around the world would be destroyed, resulting in environmental and human calamities.
In 2021, CO2 emissions, the most common greenhouse gas burnt on earth, increased by 6% to an all-time high of 36.3 billion tonnes, according to research from the International Energy Agency. The year marked the sharpest upswing in human history, erasing the pandemic-caused decrease that began in 2020.
The UN’s Kyoto Protocol of 1997 established carbon credit markets, making it the first-ever worldwide agreement targeted at reducing CO2 emissions as the concern of climate change gained prominence in the 1990s. The treaty defined emission target levels for the participating parties. This introduced “emissions trading,” which turned carbon into a commodity by enabling nations and businesses that were below the designated goal levels to sell surplus carbon units to establishments that hit their limit.
The market for carbon credits facilitates the transition to a future with net-zero carbon emissions by mobilizing resources and lowering costs for businesses and governments. Changes in how people consume CO2-emitting pollutants can be sparked and inspired by the carbon credit market, which offers a singular means of doing so.
Unquestionably, the recent expansion of the carbon market is a step in the right direction toward achieving carbon neutrality. The issue is that only governments and huge enterprises are required by law to offset their CO2 emissions, leaving the vast bulk of this $851 billion market closed to the average population.
There are mandatory or regulated markets in the UK, California, and the E.U., whose Emissions Trading System (EU ETS) has a 2021 market value of $769 billion, making it by far the largest one. Only $1 billion is allocated to voluntary carbon markets, which enable people and smaller businesses to buy carbon credits that reduce emissions.
The voluntary carbon market discourages potential participants since it is not transparent and lacks quality control in addition to being out of reach for the majority of people and businesses.
Blockchain technology is perfectly positioned to support the business’s continuing expansion by lowering access barriers as it enjoys strong growth in the carbon market. The blockchain can address issues with market transparency while also making obligatory markets accessible to everybody.
Contrary to common belief, blockchain is not just used in the cryptocurrency sector. It is a technique that may be used by a wide range of businesses to promote efficient transactions, expedite multiparty procedures, increase accountability while reducing conflicts, and open up new markets through asset tokenization.
