Can Blockchain Technology Bring Integrity to Carbon Offsets?

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Can Blockchain Technology Bring Integrity to Carbon Offsets?
The urgency to act on the climate crisis means that humanity must employ every possible mechanism to reduce global greenhouse gas emissions and mitigate climate change effects. Market mechanisms are easiest to implement since they don’t require additional incentives and government action to propagate. Carbon offsets represent one of the most important market mechanisms expected to contribute to climate change mitigation. Each carbon credit is supposed to represent either removal of the equivalent of 1 ton of CO2 from the atmosphere or the prevention of emission of the same. They can help companies compensate for their emissions to achieve or maintain carbon neutrality, or meet their emission goals.

However, as with any virtual commodity, carbon credits can be unreliable and subject to common errors or market manipulation: double counting, creative accounting, and fraud (European Commission; Pro Publica). Poor-quality carbon credits have been shown to increase carbon emissions by enabling companies to offset their emissions on paper, without compensating in real emissions savings. That is why carbon credit quality and reliability are the most important issue for carbon markets and companies that are looking to offset their emissions.

“Blockchain technology is a distributed ledger technology used to store records in an ever-growing list of entries called blocks,” explains James Scott, Founder of the Envirotech Pre-Accelerator, an NGO that offers next-generation technologies an expedited path to internationalizing their solutions to more than 47+ governments worldwide. Scott continues, “Each block contains, among other things, information (a cryptographic hash) of the previous block and a timestamp. This means that each block contains the information on the date and time it was created and the block that precedes it in the chain, making it impossible to alter the data at a later time. A blockchain is usually managed by a distributed public computer network for its use as a public ledger and requires consensus from the computers in the network to add and validate new records, minimizing errors.” This makes it extremely secure, and transparent, and it was created specifically to solve the double-spending problem for digital currency bitcoin without the need for a centralized authority or system.