8/6/2023 0 Comments Crypto carbon credits![]() ![]() This is the point of tokenizing carbon credits.Ĭarbon credits can be used as tokenized assets in cryptocurrency trading, thus bringing liquidity to carbon markets and helping everyone reach their net zero goal faster. With carbon credit trading, the company can sell these credits to an organization that produced more emissions than it paid for or that wants to participate voluntarily in carbon imprint reduction. But what if the company reduces its emissions and still has, say, 50 credits it paid for? One credit equals one tonne of CO2 or other greenhouse gas, so a company that emits, for example, 300 tonnes of CO2 per year is required to buy 300 credits. Offsetting can be done by paying direct taxes or by using an emission trading system (ETS) to buy carbon credits (i.e., the right to pollute in exchange for funding projects aimed at GHG research and reduction). That’s already complex, so let’s explain.Īn organization that directly contributes to the emission of greenhouse gases (GHGs) is usually obliged by the government to compensate for (offset) their emission. What is tokenization of carbon credits?Ĭarbon credit tokenization is the process of creating a tool within the cryptocurrency ecosystem that can be used as an investable asset in carbon credit cap and trade. This has encouraged the development of a carbon offset market where stakeholders can buy and trade carbon credits and help climate change organizations implement carbon reduction projects.Īs with any exchange system, carbon trading presents many challenges, especially when it comes to digitalization.Īt Unicsoft, we’ve been exploring how we can use our expertise in blockchain to streamline the tokenization of carbon credits and bring more efficiency and visibility to carbon credit trading.īut before we get into the technical aspects of carbon credit tokenization, let’s answer a fundamental question. While some companies must purchase carbon credits and offset their carbon footprint, others can buy them voluntarily in addition to their primary net-zero programs. ![]() Achieving net-zero carbon emissions is an ambitious goal made possible by the development of a carbon credit system. ![]()
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