An Ethereum-based cryptocurrency, Climatecoin, just partnered with a carbon credit exchange, with the goal of helping to slow down the negative effects caused by climate change. This partnership is expected to be the first step towards the creation of the earth’s very first blockchain-based platform designed for trading carbon credits.
Due to the increasing negative impact of carbon emissions to our environment, many people want to combat this issue by using carbon credits, a solution agreed upon by a majority of nations via an international treaty named, Kyoto Protocol.
The driving force behind this program is a limit to the amount of emissions that everyone can produce. Therefore, if a country wants to go over its set limit, it must first buy a carbon credit. Each carbon credit permits the production of a certain amount of emissions. As an example, one credit might equal one ton of carbon dioxide emissions.
Likewise, a nation can trade its extra credits to others via markets like the European Union’s Emissions Trading System (ETS), if it does not end up needing all its carbon credits.
This system has generated voluntary carbon offsets. These provide consumers and companies with the opportunity to pay a certain amount to offset their own emissions. Many people are willing to donate money to pay for their carbon footprints, such as paying extra for an airline ticket to offset the emissions caused by their flight.
The money spent to buy carbon credits and offsets is then donated to projects with a focus on helping the environment, such as the development of renewable energy systems or the protection of endangered wildlife and plant life.
By donating money to these projects, people have a way to feel better about the amount of emissions they are producing, since they are also paying to help find better environmental solutions.
This concept has now entered the cryptocurrency realm. The amount of energy produced to mine digital money is extremely high, leaving many people concerned about its effect on their environment.
Climatecoin hopes to assist individuals involved in the emerging crypto market while also aiding in the fight against climate change. Therefore, every token is “attached” to a carbon credit, and Climatecoin owners can use the tokens to buy carbon credits on the Carbon Trade Exchange (CTX).
Money made from these token sales will then be invested in environmental businesses, according to the company, making it the, “first carbon-zero cryptocurrency in the world.”
Blockchain is the most promising ledger technology available at the moment, and harnessing that technology to track carbon credits/offsets might help to solve some of our environmental problems.