Blockchain-based carbon trading mechanism to elevate governance and smartness

What is it about?

Climate change is considered a serious threat to planet earth. Its negative consequences affect the livings, environment and economy. Harmful greenhouse gases, especially CO2 were identified as the primary reason behind the dangerous phenomena of climate change. GHG are emitted from industrial and economical processes mostly executed by developed countries. The world recognized the risk of excessive CO2 emissions, therefore, the United Nations intervened by establishing the Kyoto protocol. This protocol aims at controlling and reducing the release of CO2 by quantifying and monetizing its emissions. To achieve its goal, the Kyoto protocol established a carbon emission trading scheme to distribute and trade CO2 allowances called Kyoto units among and between emitting participants. However, the CET scheme fell short of its goal due to lack of integrity, governance, and other security and technical issues which revealed the need for a solution to elevate the scheme and enhance its operations. On the other hand, the technology of blockchian emerged as a revolutionary way to operate business and process models due to its characteristics of decentralization, security, traceability, immutability, efficiency, and privacy. This research proposes an efficient and smart CET system utilizing blockchain and smart contract. Our paper proposes a CET framework based on Ethereum blockchain where a smart contract is developed, implemented, and tested using Solidity language to automate trading Kyoto units between entities. The proposed system performs buyers registration and Kyoto units trading using the cryptocurrency Ether for payment without the need for a third party or intermediary but rather through smart contract and blockchain technology. The result is a robust and smart system that inherits blockchain features of trust, immutability, and distribution with elevated governance and transparency.

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Why is it important?

this research significance lays in utilizing blockchain and precisely smart contract which resides on top of it to enhance the performance of the CET scheme in terms of smartness, automation, integrity, and governance and tackle the present CET market drawbacks as well as eliminate intermediaries cost. This would enhance its operations which shall fulfill its ultimate goal of preventing climate change and consequently save the environment. To achieve this aim, the study in hand design and implement a blockchain-based carbon emission trading mechanism using smart contract and Ethereum blockchain to implement the clauses of the Kyoto protocol in an automated, transparent, trusted, and secured manner that facilitates a high level of governance over the entire trading process while minimizing operations cost

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