The carbon credits market has exploded to a value of over $250 billion. A company called carbon(plan) conducted research revealing problems with the efficiency of California’s forest carbon offset program; 29% of offsets did not have the required environmental impact, worth $410 million in credits.
While the carbon credits market has grown rapidly, it still remains a highly fragmented market with a lack of standardization and transparency.
Solution:
A global and digital platform for the issuance, rating, trading, compliance, impact assessment, and utilization of carbon credits.
- Information needed for the rating of carbon credits can be attached in an immutable record for transparency, pricing, and auditability.
- For entities mandated to purchase carbon offsets, compliance can be done using the public database and IoT devices.
- Smart contracts can be used to create an open, transparent, and consolidated market for carbon credits.
- The utilization of carbon credits can be tracked openly and corruption or misappropriation can be targeted.
- The impact of carbon credit systems can be tracked and reported on public dashboards.
A few blockchain startups tried to solve these problems with limited success due to limited adoption from stakeholders and underwhelming solutions to existing problems. I believe they can be more successful now with the advance of the underlying technology, improved understanding of token economics, and greater acceptance by the general population.