Decentralizing Climate Action: Leveraging Blockchain Technology for Enhanced Transparency and Efficiency in Carbon Removal and Credit Markets

Abstract

The accelerating climate crisis, driven primarily by CO2 emissions, necessitates robust and trustworthy mechanisms for climate mitigation, with carbon credits serving as a crucial market-based tool. These credits grant the owner the license to emit a certain quantity of greenhouse gas (typically one metric ton of CO2 equivalent). The global carbon credit market is expanding rapidly, projected to grow from nearly $979 billion to over $2.6 trillion by 2028. However, this vital system is hindered by pervasive issues, including the complexity and inefficiency of manual carbon footprint calculations, lack of transparency and traceability, and the critical risks of double-counting and fraud. This paper explores how Blockchain technology, leveraging decentralized ledgers, smart contracts, and tokenization, offers definitive solutions to these systemic failures, enabling a secure, transparent, and highly efficient ecosystem for carbon removal projects and credit trading.