The mighty blockchain technology is not just the bedrock of cryptocurrencies like bitcoin. The technology – in simple terms, a decentralised publicly distributed ledger consisting of blocks which record transactions – is also being seen as an important tool in managing the carbon markets.
The overwhelming reason being the transparency and safety that the technology provides.
In fact, a 2019 research paper, ‘Application of Blockchain In Carbon Trading’, while noting that many features of the carbon market is similar to blockchain mechanism, reiterated that the technology can make carbon trading “safe and reliable, efficient and convenient, and open and inclusive”.
“Carbon markets” is the latest buzzword, thanks to the recently-concluded COP26 Summit. After years of negotiations, a deal setting the rules for carbon markets has been reached at the COP26 meeting. The deal, as Reuters notes, will help in “unlocking trillions of dollars” to combat climate change.
Carbon markets, which aim to eventually reduce greenhouse gases responsible for global warming, allow buying and selling of “credits” that permit an entity (companies or countries) to emit certain amounts of carbon dioxide. In other words, the market allows developing countries like India to sell carbon credits it has earned by switching to less-polluting technologies and rich countries to buy credits to offset