Blockchain-based Carbon Credit

Carbon credits implemented as a currency or tokens stored in the blockchain that create economic benefit, capital, and demand for emissions reductions. It brings transparency, trust, and scalability to carbon markets.
Technology Life Cycle

Technology Life Cycle


Marked by a rapid increase in technology adoption and market expansion. Innovations are refined, production costs decrease, and the technology gains widespread acceptance and use.

Technology Readiness Level (TRL)

Technology Readiness Level (TRL)

Prototype Demonstration

Prototype is fully demonstrated in operational environment.

Technology Diffusion

Technology Diffusion

Early Adopters

Embrace new technologies soon after Innovators. They often have significant influence within their social circles and help validate the practicality of innovations.

Blockchain-based Carbon Credit

Carbon credits are certificates that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gasses. However, since the birth of carbon offset markets, fraud has been a severe problem, such as double spending of unretired carbon credits. When carbon credits are combined with the blockchain, tracking, measuring, and storing the output of carbon emissions is more efficient and transparent, while also allowing for autonomously trade or block quota transactions with the third party.

This emission reduction protocol provides a positive economic and social reward for reductions in greenhouse gas emissions. It creates an economic benefit, capital, and demand for emissions reduction opportunities and, ultimately, incentivizes change in both individual and group behavior. By taking advantage of the integrity and accountability that blockchain provides, the carbon trading market would make their carbon data emissions traceable and reliable. Low-carbon projects that reduce greenhouse gasses in the atmosphere, for instance, would receive carbon credits to be used as revenue for reducing carbon emissions or for sequestering carbon. Companies that produce greenhouse gasses would buy carbon credits to offset their emissions.

Carbon credits can be implemented as a currency or as tokens stored on the blockchain that contain unique information about each credit’s origin, authenticity, and additional data, including being a benefit or bonus from reforestation or renewable energy. Blockchain technology could also lower entry barriers while allowing carbon credits to be broken down into per-product or per-transaction quantities. As a result, consumers could be given the opportunity to offset their carbon impact for individual purchases in real-time.

Future Perspectives

By creating a financial pathway for incentivizing emissions reductions, proactive investment into climate projects, technologies, and policies would be stimulated. New peer-to-peer and business-to-consumer marketplaces would emerge, making it easier for everyone to participate in these new carbon markets.

The blockchain protocol could open up existing carbon markets and create a broader range of players, including smaller businesses and individuals. The public and transparent nature of the information could encourage international collaboration and strengthen trust in the system.

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The technology behind the blockchain has the potential to not only improve existing carbon markets, but also to create new carbon marketplaces and ultimately accelerate the transition to a low carbon world.
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This paper introduces the similarity between the mechanism of carbon trading and blockchain, then it elaborates on the application of blockchain in carbon trading. In corporate carbon trading, blockchain technology can record and transfer information flow reliably, realize point-to-point transactions between suppliers and demanders to achieve “decentralization”, help to reduce the entry threshold for the carbon trading market. At the same time, an analysis of social environment for blockchain-based carbon trading on person is made. Finally, the paper confirms the value of "blockchain + carbon trading" and looks forward to the future.
The growing energy consumption and associated carbon emission of Bitcoin mining could potentially undermine global sustainable efforts. By investigating carbon emission flows of Bitcoin blockchain operation in China with a simulation-based Bitcoin blockchain carbon emission model, we find that without any policy interventions, the annual energy consumption of the Bitcoin blockchain in China is expected to peak in 2024 at 296.59 Twh and generate 130.50 million metric tons of carbon emission correspondingly. Internationally, this emission output would exceed the total annualized greenhouse gas emission output of the Czech Republic and Qatar. Domestically, it ranks in the top 10 among 182 cities and 42 industrial sectors in China. In this work, we show that moving away from the current punitive carbon tax policy to a site regulation policy which induces changes in the energy consumption structure of the mining activities is more effective in limiting carbon emission of Bitcoin blockchain operation. The growing energy consumption and carbon emissions of Bitcoin mining could potentially undermine global sustainability efforts. Here, the authors show the annual energy consumption of the Bitcoin blockchain in China is expected to peak in 2024 at 296.59 Twh and generate 130.50 million metric tons of carbon emissions.
The carbon credit system needs an overhaul to effectively help in reducing climate change, according to a UCL study. French global energy giant Total recently announced it had delivered its first shipment of 'carbon neutral liquid natural gas'. Natural gas is, of course, a fossil fuel and so can't itself be carbon neutral. Instead, emissions from transporting the cargo were partly "offset" by investing in a wind farm in China.
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