BLOCKCHAIN IN CARBON CREDIT

Overview of carbon trading?

A market system called carbon trading has been put in place to promote the reduction of greenhouse gases such as carbon dioxide worldwide. "Kyoto Protocol", which was adopted by the United Nations government in December 1997 in Kyoto, Japan, considers the market system as a new way to overcome the challenge of reducing gas emissions; more specifically, carbon dioxide is treated as a resource, creating a carbon trading system. Figure 1 describes the exact carbon exchange process. Companies that have invested in energy conservation changes or technology upgrades and infrastructure have seen a reduction in emissions. The companies with the largest distribution will have to buy more from them. This will increase awareness of low carbon emissions. In order to increase the effect of saving energy and reducing emissions, infrastructure, technology, energy conservation, energy management and other measures will be promoted.?

CARON CREDIT: WHAT IS IT??

Carbon credits, also known as carbon offsets, are licenses that allow the owner to emit some carbon dioxide or other greenhouse gases. Carbon dioxide or similar greenhouse gases are released under the credit. The cap and trade system includes carbon credits as one of its components. Companies that pollute receive credits that allow them to continue to pollute up to a periodic ceiling. The company can, meanwhile, sell the credits it doesn't need to another company that needs them.?

Proponents of the carbon credit system say that it results in approved climate action plans to reduce, eliminate or avoid greenhouse gas (GHG) emissions in a measurable and demonstrable way.?

• Key Lessons
• A tool has been developed to reduce emissions: carbon credits.?
• Businesses receive a fixed amount of credit, which decreases over time. Any credit can be sold to other businesses.?
• Carbon credits financially incentivize companies to reduce their carbon emissions. Those who strive to reduce their emissions can still work, but at a higher cost.?
• The "cap-and-trade" system that was used to reduce sulfur pollution in the 1990s, is the basis of carbon credits.?

IN WHAT MANNER ARE CARBON CREDITS AND OFFSETS MADE??

Although the main trading unit is the same - of one tonne of carbon dioxide, commonly called CO2e - credits and payments represent two different markets. It is important to remember that one ton of CO2 refers to an equivalent amount. How much CO2 is there in a ton??

By driving, shopping, using energy and gas at home, and just going about their daily activities, Americans emit 16 tons of CO2e each year.?

To put these things into perspective, driving from New York to Las Vegas in an average car of 22 mpg will result in the production of one tonne of CO2e. Carbon credits are issued by government agencies at the national or international level. The Kyoto and Paris Agreements established the first global carbon markets.?

• HOW ARE CARBON CREDITS APPLIED??

Reducing greenhouse gas emissions into the atmosphere is the ultimate goal of carbon credits. As mentioned, the ability to deliver their greenhouse gas emissions with one tonne of carbon dioxide is represented by carbon credits. In terms of carbon dioxide emissions, that's a 2,400-mile journey, according to the Environmental Defense Fund.?

Companies or cities get a lot of credits, which they can trade to help solve global pollution. The United Nations says that since carbon dioxide is the main greenhouse gas, "people only talk about carbon trading".?

The goal is to gradually reduce the number of credits to encourage companies to develop new strategies for reducing greenhouse gas emissions.?

• CARBON MARKETS?

The ultimate goal of carbon credits is to reduce greenhouse gas emissions. As mentioned earlier, carbon credits are the ability to produce greenhouse gases in one tonne of carbon dioxide. That's equivalent to traveling 2,400 miles in terms of carbon dioxide emissions, according to the Environmental Defense Fund.?

Credits are issued to member states or countries, which they can trade for other credits to help with overall global emissions reductions. Since carbon dioxide is the main greenhouse, according to the UN, "people only talk about carbon trading".?

Credits will be gradually reduced to encourage companies to find new ways to reduce greenhouse gas emissions.?

WHICH IS THE MARKETPLACE FOR CARBON?

There are two main markets for purchasing carbon credits within the carbon market;?

• One is the market which is regulated by cap and trade laws at the national and regional levels?
• The second is the free market where companies and individuals can buy credits to reduce their carbon emissions.?

Think about it this way:?

Regulatory markets are essential, while voluntary markets are optional. As a regulated market, each company that participates in the cap and trade system receives a certain amount of carbon credits each year. Some of these companies produce fewer plants than their allocated carbon credits, leaving them with a surplus of carbon credits.?

However, some companies (especially older, less efficient ones) produce more crops than they can stop each year from the credits they receive. These companies must purchase carbon credits to offset their emissions.?

Many large companies have announced or are announcing plans to reduce their carbon footprint in the near future. The number of carbon credits they are allocated each year, which depends on the size of each business and how well they perform compared to industry benchmarks, may not be enough to meet their needs.?

Some companies still have a long way to go before reducing their emissions despite technological advances. However, they will continue to provide products and services to raise the funds needed to reduce the carbon footprint of their operations. Therefore, they must find a way to reduce the amount of carbon they export.?

HOW TO GENERATE CARBON CREDITS

By reducing, applying and saving crops through different methods, different types of businesses are able to create and trade carbon credits.?

Here are some of the most popular types of carbon offset projects:?

• Energy efficiency initiatives?
• increase Carbon energy efficiency and Storage
• reduce methane and conserve wood and land use.?
• Starting power efficiency:?

Long before the carbon credit market became popular; they already exist. Many countries around the world are fortunate to have access to various forms of renewable energy. countries like Brazil or Canada, which have a large number of lakes and rivers, or countries like Denmark and Germany, which have a large number of air zones. Renewable energy is already the most desirable and affordable form of energy in these countries, but now they are also providing the money to produce carbon footprints.?

• Increase energy efficiency:?

By reducing the energy needs of existing structures and infrastructure. By using less energy, even small daily changes like switching your home from incandescent lights to LED lights can help the environment. On a larger scale, this can include things like renovating buildings, reorganizing industrial operations to increase efficiency, or providing working tools with more efficient equipment.?

• Reduction and Saving of Carbon and Methane:?

The process removes CO2 and methane, which can cause global warming 20 times more than CO2, from the atmosphere.?

Methane is easy to handle because it can be easily burned to produce CO2. The conversion of a molecule of methane into a molecule of CO2 through combustion nevertheless reduces the net emissions by more than 95%, while methane destroys the atmosphere more than 20 times more than CO2.?

In the case of carbon, capture usually occurs directly at the source, for example through chemical or electrical installations. The idea of long-term storage of this carbon, treating it in the same way as nuclear waste, is a recent proposal, despite the fact that the carbon collected underground for various applications , such as greater oil recovery, has been. going on for decades.?

• Forestry and land use:?

Use soil and plants as Mother Nature's carbon sinks to remove carbon from the atmosphere. This includes landscaping, development of new trees, maintenance and restoration of existing trees. Through photosynthesis, plants convert CO2 from the atmosphere into organic matter, which eventually turns into dead plant matter and is buried in the earth. After dispersal, the CO2-enriched soil helps the soil return to its original properties, increasing crop production and reducing pollution.?

BLOCKCHAIN APPLICATION IN CARBON TRADING?

The research and implementation of blockchain is increasing all over the world. Vane Weather has entered a new era with "Blockchain Plus". The integration of carbon assets has slowly gained popularity in China. National standards for blockchain technology are being developed by the Ministry of Industry and Information Technology of the Republic of China. It seems clear that blockchain technology will eventually be used in the carbon sector. The blockchain system and many aspects of the carbon trading market are similar. Blockchain is a centralized database. Pricing, security, trading and management of carbon emissions are the main principles of carbon trading. While carbon trading is the use of data, blockchain is a real form of data. The advantages of "blockchain + carbon exchange" are considered as follows;?

• Reliable and safe:?

Make sure that the carbon emissions during the business process are not good. Blockchain's concept of a distributed ledger calls for transactions between members of the network to be properly recorded in a ledger. Each record will have a time stamp and a unique cryptographic signature that links each transaction to the record's previous records.?

Any changes made to the documents will be accurately reflected in each, usually within minutes or even seconds, preventing any mistakes or wrongdoing. Blockchain technology can reliably record and transfer carbon emissions trading, to be transparent.?

In order to avoid problems such as excessive amounts of money and frequent transactions, we can immediately find problems in business connections and ensure information traceability by creating a contract network. Even if fraud or illegal trading occurs, it will be exposed, and the legal role of the carbon market will be strengthened.?

• Saves time and is convenient:?

The general plan is now divided into three sections. A registration system is also used to ensure the creation and protection of carbon emissions, as well as the management of accounting records. Carbon emission trading is closed through the carbon emission trading system. A company's carbon emissions management system complements both third-party accounting records and the company's own carbon emission calculations.?

With the help of blockchain technology, it will be possible to push control, records and trading processes into the ledger in the order they occur. Changes made through searches, calls, and even system changes will also appear in the same collection document, enabling a seamless connection between private and public platforms and greatly reducing operational costs.?

In addition to the openness and invulnerability of the data mentioned earlier, blockchain features also include a very important aspect of freedom. The same standards will be followed by all companies, and all carbon emissions transactions must follow the same verification algorithm to ensure consistency across all operations. The carbon market will be more independent and 'decentralization' will be achieved this way. The first carbon trading company was launched on June 18, 2013 from Shenzhen. The main source of the exchange rate, the carbon trading fee, is from 0.08% to 0.7%. However, depending on the status of the carbon trading platform in China, trading fees can only be used to offset the cost of electricity and water. Many businesses rely primarily on disclosure of carbon market research fees, consulting fees for low carbon projects, and other fees. These are combined with the core competencies of research and consulting firms. Since the core business of carbon trading cannot sustain itself, it backs other businesses. He was in a bad mood. Cross-border relationships between suppliers and applicants are made possible through a "revolution" that removes the middle layer. Blockchain has the ability to make business decisions on its own, and it can continuously improve business processes and methods based on past business experience. In this process, efficiency will be greatly improved and the utilization rate of carbon emissions will increase.?

• Free and open to all:?

On December 18, 2017, the National Development and Reform Commission released the "National Carbon Emission Trading Market Construction Program (Power Generation Industry)" with the approval of the State Board. This article discusses the high carbon emissions of the electricity sector as well as the development of carbon markets.

Furthermore, it is recommended to include in the portal companies whose annual energy consumption is 10,000 tons of coal and 26,000 tons of carbon dioxide equivalent. The meeting also shows the need to lower the threshold for entering the carbon market and bring more companies to its management to grow and improve. Although many small and medium-sized enterprises (SMEs) are not allowed to enter the commercial market, it is said in the document that it is possible to reach such an indicator because the plan has reached approval for their access. Many small and medium-sized enterprises in Canada are active in many high-tech industries, such as transportation, biomass and bioenergy, manufacturing processes, energy production, energy resources, energy production, recycling and reuse. Many Canadian government initiatives, such as price support, tax breaks and project subsidies, have created a favorable environment for small and medium businesses to provide sustainable energy. The direction between China's large and small and medium-sized enterprises in green development is now limitless. The 12th five-year energy conservation and emissions reduction program supports large companies. Big companies these days are very good at support development. However, the technical equipment used by small companies often consumes many different pollutants. Whether it is a large company or a small or medium-sized company, they will make progress in energy conservation and emission reduction in a similar way. This issue needs to be resolved as soon as possible. With the help of blockchain technology, the output of any company can be like an asset.

Any company, regardless of size, that produces CERs is considered a tradable commodity in the carbon market. Blockchain technology will help reduce the barriers to entering the carbon market and actively exploit the informal plans of small and medium enterprises in the energy transition. They can benefit from the flexible and responsive elements of the low carbon economy and use them to take economic opportunities.

?ON-PERSON BLOCKCHAIN CARBON TRADING?

In the Energy Review of 2013, Dieter Helm, professor of economics at the University of Oxford in England, thinks about the question of the Kyoto process. The Kyoto Protocol does not take into account the carbon footprint. Instead of a consumption system, it is based on reducing carbon emissions during production. However, consumers have a direct impact on carbon footprint and carbon consumption. In fact, this idea makes it clear. The fact that the public does not monitor carbon emissions while companies have been doing so is a problem for the growth of the carbon market. The public is still not aware of the carbon market, despite the strong commitment of governments and financial institutions to its creation. The use of the blockchain will enable individual participation in the carbon trading market in a similar way to the idea of the increase of small and medium enterprises. This will bring together the ways of individual workers and encourage the entire society to join together to change this embarrassing situation. The application can solve the problem of data ownership, privacy and rights as well as blockchain is applicable to transactions (bitcoin). Individuals who engage in low-carbon practices collect carbon credits and add them to a blockchain account using technology.

The acceptance of the blockchain deposit system is secure, open and efficient. Using a critical intelligence approach, the basic information of the low carbon character of each individual and the carbon component will be resolved. The public can buy carbon credits to consume or invest in carbon markets. For example, the EU Scanergy initiative combines private carbon trading with blockchain to enable the trading of green energy by small consumers. The policy, which has not yet been implemented, intends to review the situation of production and consumption of the grid every 15 minutes and the trading process and the payment of energy suppliers with a cryptocurrency similar to bitcoin called NRG to promote energy production. The "power" of the "Forest of Ants" initiative in China has a similar effect to carbon money. The reduction of carbon emissions by users by driving, paying water, electricity and coal bills online and buying tickets online will count as virtual "energy", which will be used to grow virtual trees in the account them. To encourage and encourage low-carbon environmental protection practices among employees, Ant's financial and social welfare partners will plant real trees on the ground while the artificial trees grow.

It is expected that it will become a "carbon account" for future participants to participate in carbon trading and investment if everyone's responsibility to reduce carbon emissions in the country will be recognized and included with the CCER model from China. This is according to Chen Long, director of strategic planning of Ant Forest.

Clearly, shared ledgers will accelerate the integration of low-carbon practices with government policies, public services, and real estate if blockchain technology is used for private carbon trading. For example, in 2016, China's first carbon currency exchange platform saw the combination between the carbon coin system and city management, traffic police and other departments (Shenzhen). The carbon cost can be calculated according to the user's driving.

WHAT WAYS CAN BLOCKCHAIN REDUCE CARBON EMISSIONS??

The transparency, compliance and traceability of greenhouse gases can be opened up by applying blockchain, a powerful technology. It enables companies to provide accurate, reliable, structured and easily accessible data on carbon emissions. Smart contracts and blockchain can be used to calculate, monitor and report carbon footprint reductions across the board. It can provide real-time analysis, real-time data verification, and clean data logging. Blockchain technology allows companies to connect their efforts to one another. Also, it can clearly identify the contribution of the actors to reduce their carbon footprint. Everyone benefits from healthy competition and market-based incentives.

An introduction to the clean technology sector is essential for this process. They are creating a system with blockchain functionality that connects businesses, governments and citizens.

Blockchain's decentralized system offers both depth and breadth. It includes everyone in the calculation and allows them to do so. Throughout the supply chain, including manufacturers, suppliers, distributors and consumers, it helps track and report reductions in greenhouse gas emissions. The advancement of Blockchain technology is an effective tool for collective action to combat climate change. It is important to recognize the unique contribution of cleantech entrepreneurs to this process. Public and private investors are beginning to realize their unique value.

Here are some steps the EU is taking to use blockchain for climate action:?

Encourage the development and use of blockchain technology, which is good for overcoming humanitarian disasters and motivating people to act responsibly and reduce their carbon footprint.?

Develop technical support and investment strategies to enable blockchain-based digital technologies to benefit climate change mitigation and adaptation. Facilitate blockchain-based solutions and networks between providers and consumers, going beyond the individual to engage with social actors.?

Supports sustainable financial planning and supports the use of blockchain-based technology to support climate change through green bonds, fintech solutions and various payment systems.?

Promote the development and implementation of blockchain-based solutions that contribute to climate action and greenhouse gas reduction of EU countries and national governments. Establish partnerships with key stakeholders, such as international financial institutions such as the World Bank, the European Investment Bank and the European Bank for Reconstruction and Development.?

Promote the development of Europe's innovation ecosystem and clean technologies and improve access to finance for small and medium-sized enterprises.?

CONCLUSIONS AND PROSPECTS?

The characteristics of the blockchain are clearly demonstrated to demonstrate its value in business when combined with the carbon emission trading system. At the individual level, it is determined that the carbon market has reached a certain level, which will be the basis for promoting the blockchain. However, blockchain technology's potential and applications are still small. One thing is that blockchain technology is still new. Processing power and response time are constraints. On the other hand, the power system is so complex that it needs a lot of study, political support and related skills. Before blockchain can be implemented, there is still a lot of work to be done.