7️⃣Blockchain emerges as a solution

Tokenization in essence is serial or contract number, receipt, and inventory proof all in one. It is effectively a global, fungible, divisible, immutable asset with a GPS tracker, photo evidence, auditor report etc. Tokenization is the process of creating a digital representation of an asset where ownership and other metrics like location of that asset can be exchanged or tracked on a distributed ledger or blockchain.

This makes it trackable at every intersection, and ensures this information is hard-coded for future use.

The legacy carbon market (Kyoto, Article 6 of the Paris Agreement that allows countries to voluntarily cooperate with each other, as well as the voluntary corporate carbon offset markets) faced several failings, including the issue of double counting and the lack of transparency and traceability in the emissions trading system. Blockchain technology has the potential to overcome these failings and improve the effectiveness of carbon markets. Here are some ways in which blockchain technology can help:

Transparency and Traceability: One of the main issues with the Kyoto Protocol's carbon market was the lack of transparency in the emissions trading system. Blockchain technology can provide transparency and traceability by recording all transactions on a decentralized ledger that can be accessed by all participants in the network. This allows for greater transparency and ensures that all emissions reductions are accurately recorded and verified.

Smart Contracts: Blockchain technology enables the use of smart contracts, which can automate the verification and validation of emissions reductions. Smart contracts can be programmed to automatically verify that emissions reductions have occurred, eliminating the need for third-party verification and reducing the risk of fraud.

Immutable Record-keeping: Blockchain technology creates an immutable record of all transactions, making it difficult to manipulate or alter data. This ensures that all emissions reductions are accurately recorded and prevents the issue of double counting.

Incentivizing Sustainable Behavior: Blockchain technology can also enable the creation of decentralized carbon credit marketplaces, where individuals and companies can buy and sell carbon credits. This creates a financial incentive for sustainable behavior and encourages the development of low-carbon technologies.